Can You Qualify For VA Loans After Bankruptcy?

Can You Qualify For VA Loans After Bankruptcy?

The VA loan is available after bankruptcy, as well. An FHA loan or conventional loan may be easier to obtain in some circumstances than a VA loan. The following factors may determine whether active and retired military service members qualify for VA loans:

  • Your bankruptcy type
  • Bankruptcy for what reason?
  • Whether you meet the VA’s eligibility requirements

VA Loans After Bankruptcy – When Can I Apply?

In the event of bankruptcy, potential home buyers are subject to a waiting period in order to qualify for a VA loan, and this period varies depending on the type of bankruptcy filed. After bankruptcy, individuals are likely to have to wait two years before applying for a VA loan.

You can apply for a mortgage loan once you have filed for Chapter 7 bankruptcy, which is the biggest difference between it and a Chapter 13 bankruptcy. There are income eligibility requirements for those who want to file for Chapter 7.

Bankruptcy Chapter 7

As part of Chapter 7 bankruptcy, individuals (or businesses) can sell their property for debt repayment. The remaining debts are discharged once the sale of assets is final, giving debtors a clean financial slate to start over. Chapter 7 has several disadvantages, however, including:

  • You won’t be able to keep the property (such as cars and real estate)
  • Keeping certain assets isn’t possible if you’re behind on payments
  • The bankruptcy information on your credit report will remain on your credit report for 10 years

VA loans are available to those who meet the following criteria after bankruptcy:

  • Discharged debt must be at least two years old
  • Since discharge, no late payments have been made or new accounts have been collected
  • Credit scores between 580 and 640 are required

Bankruptcy under Chapter 13

“Reorganization bankruptcy” is known as Chapter 13 because it allows individuals to work out a repayment plan for keeping their property. Debt repayment plans will be negotiated with the court by a bankruptcy attorney. In most cases, debts will be discharged once the repayment plan is complete, typically after 3 – 5 years.

Chapter 13 is a better option for those who do not qualify for Chapter 7 but can pay some of their debt. In seven years, the bankruptcy will be removed from your credit report, and you will be able to retain your property.

Chapter 13 bankruptcy borrowers are also eligible for VA loans sooner; requires the bankruptcy to be discharged or dismissed before applying.

After filing Chapter 13, applicants for a VA loan must meet the following qualifications:

  • During the application process, you may be asked to provide details about any late payments within the last 12 months.
  • Depending on your situation, a minimum credit score of 580 – 640 is required.


While foreclosure isn’t a type of bankruptcy, it can typically occur in conjunction with bankruptcy since homes are foreclosed upon due to non-payment.

The filing of a Chapter 7 bankruptcy followed by a foreclosure does not disqualify borrowers from applying for a VA loan. If a foreclosure was part of any bankruptcy proceeding, however, there is a bit more paperwork involved. A letter of explanation will be required from borrowers to explain their personal circumstances.

Those who have previously foreclosed on a VA loan may not be able to use their full VA loan entitlement once again, so if you have had bankruptcy filings in your financial history, you should discuss this with the lender during the mortgage application process.

During the mortgage application process, it is always a good idea to discuss options with the lender if you have previously filed for bankruptcy and foreclosed on a VA loan home.

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