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HomeExclusiveCan You Get A Va Loan With A Bankruptcy

Can You Get A Va Loan With A Bankruptcy

Gustan Cho Associates Does Not Have Any Lender Overlays On Va Loans

What you should know about getting a VA loan after bankruptcy

VA loans are the best home mortgage program in the nation. VA loans are only available to active and/or retired members of the U.S. Armed Services with a valid certificate of eligibility ,

Lenders offer 100% financing with no down payment required at lower rates than conventional loans due to the government guarantee, There are no mandatory mortgage insurance on VA loans,

The VA Funding Fee is a one time cost that can be rolled into the balance of the VA loan, The Veterans Administration has much lenient agency mortgage guidelines than other loan programs Veteran home buyers with a Certificate of Eligibility can qualify for VA Loan During Chapter 13, Bankruptcy one year into the Chapter 13 Repayment Plan.

In order to qualify for VA Loan During Chapter 13 Bankruptcy, the borrower will need to have the approval of the Chapter 13 Bankruptcy Trustee which is normally not a problem.

United States Department Of Agriculture Loan

Low- and middle-income borrowers willing to purchase a home in a rural community will benefit from this loan. It offers a low-interest, no down payment option for those who might not otherwise be able to qualify for conventional financing.

Applicants will be eligible for this loan three years after receiving a Chapter 7 discharge. However, if you qualify for the exceptional circumstances exceptionfor instance, by demonstrating that the bankruptcy was beyond your control and not a result of financial mismanagementyou might be able to qualify as soon as 12 months after the discharge.

A Chapter 13 bankruptcy filer can apply after 12 months of successful plan payments, or sooner on a showing of exceptional circumstances. To find out more, visit the United States Department of Agriculture Rural Development website.

Va Loans After Conventional Or Fha Foreclosure

If you default on a conventional loan or an FHA loan, you may lose your home to foreclosure. Fortunately, you may be able to get your finances in order to the point where you feel comfortable buying a house again. When this happens, you may start looking into VA loans if youre a veteran or active military member. However, there are a few things youll want to know if you plan to apply for a VA loan following a conventional or FHA foreclosure.

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Can You Get A Home After Bankruptcy In Delaware

Yes, you can get into a home again after a bankruptcy in Delaware and every other state, but be prepared for higher interest rates. A bankruptcy will stay on your credit report for seven to ten years, but it stops affecting your credit significantly after two years if you report has been updated correctly. If you want to apply for a mortgage loan after a bankruptcy filing call 302-703-0727 or APPLY ONLINE

Be sure to check your credit report annually, and make sure that all accounts that were part of your bankruptcy were discharged. Lawyers get paid to file the bankruptcy and have no interest in making sure that your credit report is accurate after the bankruptcy.

Advantages Of Va Loans

Can I Get A VA Home Loan After Foreclosure, Bankruptcy, or ...

VA loans require no down payment on a home purchase and there is no mortgage insurance premium required. There is a VA loan funding fee but that funding fee can be rolled into the balance of the VA loan. VA loans are assumable as long as the home buyer qualifies for a VA loan. The assumable aspect can be of major benefits if in the future mortgage rates do not remain at historic lows as it is today. It can be a great selling point.

Gustan Cho Associates Mortgage Group are national lenders with no overlays on VA Loans. We have no lender overlays on all government and conventional loans. Veteran Borrowers who need to get pre-approved on VA Loans with a five-star VA mortgage lender with no overlays, please contact us at 262-716-8151 or text us for a faster response. Or email us at We are available 7 days a week, evenings, weekends, and holidays.

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Look For Ways To Increase Your Eligibility

Bankruptcy and foreclosure don’t disqualify you from getting a VA loan in many cases. But you still need to establish a good credit history and meet financial and income standards to get approved. If you are in a waiting period for VA loan eligibility, work to establish a history of paying your current bills in full and on time. Also check your credit report for errors and work to correct any you find. This may improve your chances of qualifying.

Fixing Low Credit Scores

Borrowers with low credit scores should avoid paying third parties for dubious credit repair schemes. There are several things you can do yourself to improve your credit score for free.

What are these things? Work to establish a minimum of 12 months of on-time payments on ALL financial obligations. Dont bother applying for a home loan without this 12 month payment record if you are concerned about your ability to get approved for a home loan due to credit issues. The on-time payment record will go a long way toward improving your credit scores, but it takes time.

Your debt ratio is just as important as your credit score when it comes to home loan approval. If more than 40% of your income is taken up by your monthly financial obligations, you should work on lowering that percentage long before applying for a new home loan of any kind, VA or not. Lowering your debt ratio can help improve your FICO scores.

If you carry credit card balances above the 50% mark you should work on reducing those balances below the halfway mark on all cards where possible. This not only lowers your debt ratio but also helps your credit score.

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The Biggest Problem With The Bank Reo Home

The bank REO home has many benefits, of which the largest is the cash you save. When you combine that with the 100% VA financing, you have yourself quite a good deal. The problem, though, is securing the financing. VA financing depends on the condition of the home. The VA relies on the appraisal not only for the value of the home, but also the condition.

The VA has what they call Minimum Property Requirements. The MPRS are certain standards a home must meet. The unfortunate part of buying a bank REO home is that you buy it as is. In a traditional sale, you can request that the seller make repairs to the home if the inspector or appraiser finds issue with it. With a foreclosed home, the bank is the seller and they arent going to make any changes. In other words, if the home is not in livable, sanitary, and safe condition, you wont be able to secure VA financing.

Finding A Willing Lender

How soon can you qualify for a VA loan after a bankruptcy?

The next largest obstacle is finding a willing lender. While the VA does allow 100% financing on a foreclosed home if it passes the appraisal, a lender may not be willing to do so.

The VA doesnt provide the funds for the loan. The lender that underwrites your loan provides the funds. This means the lender has the final say. Only certain lenders are VA approved. This means they know and understand the VAs guidelines. It also means they can add their own requirements to the rules. If you want to buy a bank REO home, you may have to shop around for a while in order to find a willing lender.

In short, you can buy a bank REO home with VA financing, but its dependent on many factors. Discuss your options with your real estate agent that is representing you in the purchase. If you find a willing lender and a home in good condition, you could get quite a deal with 100% financing on a home that is likely sold for less than it is worth.

Do You Know if You Qualify?

  • No credit check required by the VA
  • No employment verification required by the VA
  • No home appraisal required by the VA
  • Switch your ARM to a fixed-rate VA loan
  • Lower your interest rate, save money

If you are a veteran with an existing VA loan or mortgage, you may qualify to save with a VA Interest Rate Reduction Refinance Loan, or VA IRRRL.

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Why Is There A Waiting Period For Mortgages After Bankruptcy

A bankruptcy, whatever the reason, tells a lender the person filing had trouble paying bills. Lenders want to make sure that someone who had to take that drastic financial step is now a good risk. A mortgage is a lot of money that takes a long time to pay back. Lenders arent punishing mortgage applicants for filing bankruptcy, they just want to make sure theyre a good financial bet.

The first obstacle to owning a home after bankruptcy is dealing with the waiting period . Use that time well restructuring your finances and rebuilding your credit. It shows lenders you can make payments on time and live up to your end of the deal.

The waiting period as a chance to prove that bankruptcy doesnt define you, but that youre someone whos taken a bad financial situation and turned it around. Youre committed to managing a budget and making payments.

There are three kinds of personal bankruptcy, Chapter 7 and Chapter 13 make up 99.9% of bankruptcies. Chapter 11 is sometimes, though rarely, used by individuals. Waiting periods differ for each one.

Chapter 7 Waiting Periods

A Chapter 7 declaration must have been discharged or dismissed for 2 years prior to application, if a borrower has either reestablished good credit or not incurred new debt. Its possible an FHA loan will be approved after only 1 year since discharge. That occurs if the borrower shows the bankruptcy was caused by extenuating circumstances, is unlikely to reoccur and they have exhibited an ability to manage their finances since the bankruptcy occurred.

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Va Loan Bankruptcy Waiting Periods

The waiting period can vary depending on a host of factors, but a big one is the type of bankruptcy you experienced.

With a Chapter 7 bankruptcy, lenders typically wait two years after the date of discharge. As for Chapter 13 bankruptcy, you may be eligible for a VA loan just 12 months removed from the filing date.

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Getting A Mortgage After Bankruptcy: Waiting Periods

Can I Still Get a VA Loan After Bankruptcy

Understand itll take time to rebuild the trust needed for lenders to consider your application. In most cases, the soonest Rocket MortgageĀ® can help you refinance your house or get into a new one is 1 year after the discharge or dismissal of your bankruptcy.

The length of the waiting period depends on the type of bankruptcy you filed and the type of loan you want to get.

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The Main Areas Of Concern To Watch

While you probably wont know the true condition of a bank REO home until the appraiser goes through it, there are some obvious areas you can pinpoint that could cause a problem with VA financing:

  • Roofing A quick look at the roof will tell you if there are any major defects. Does it look to be in good condition? Do you see any areas of the roof missing? Does it look to be in shambles? Without a roof that will last at least another few years, VA financing wont be possible.
  • Utilities All utilities and systems must be in good working condition. If you get the opportunity to walk through the home, check the plumbing, electrical, and heating components of the home. If anything isnt working, it wont pass the VA appraisal.
  • Windows All windows must be in good condition. A quick look will let you know if there are any broken windows or if they look to be in disrepair.

If you know off the bat that there is something wrong with the roofing, utilities, or windows, you are better off looking for a different home as VA financing likely wont be an option.

What Are Va Entitlements And Why Are They So Important

A key feature of VA loans is the entitlement. A VA loan entitlement is basically the amount of the loan that the VA will guarantee to the lender if you default.

There are two types of entitlement:

  • Basic entitlement: up to $36,000 for loans worth less than $144,000, or 25 percent for loans of that amount or more.
  • Bonus entitlement: Up 25 percent of the Federal Housing Finance Agency loan limit, minus the basic entitlement.

For those who need to purchase a home that costs more than $144,000, the bonus entitlement can be used. For example, in most counties in the U.S., the FHFA conforming loan limit in 2021 is $548,250 and $647,200 in 2022. In that case, 25 percent of the loan amount would be $137,062.50 in 2021 or $161,800 in 2022. However, for the total entitlement, you need to subtract out the basic entitlement, leaving you with $101,062.50 in bonus entitlement money for 2021 and $125,800 in 2022.

Many lenders are willing to loan those who qualify for a VA loan up to four times the amount of their entitlement, so you might be able to get a loan for $144,000 on the basic entitlement of $36,000.

For those who live in high-cost areas, the bonus entitlement is figured in the same way, but based on the higher FHFA conforming loan limit, which is based on the county where the house is located. Before applying, check the FHFA website for more information on the loan limits in your area.

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After Youve Filed For Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy is a three- to five-year processbut that doesnt mean that you cant buy a house during that time. You can obtain an FHA loan before you complete your plan if you meet the following conditions:

  • Youve paid 12 months of plan payments.
  • The court approves your request to purchase a house with an FHA loan.
  • You can demonstrate that the reason you filed for bankruptcy is unlikely to occur again.

Keep in mind that the court might not be on board if youd have to reduce the amount paid to your creditors in your plan to qualify for a home loan. And if you have to present the terms of the house purchase in your motion , you might have a hard time closing the deal. Many sellers would be unwilling to take their house on the market on the chance that youll obtain the necessary court approval.

If youre considering this option, you should consult with a knowledgeable bankruptcy attorney before filing. A lawyer can advise you about the feasibility of a future loan qualification and, if possible, assist you by putting together a repayment plan that will help you reach your goal.

Va Home Loan Fico Score Requirements

How To Get A VA Mortgage Loan After A Bankruptcy

As mentioned above, the VA does not set or regulate FICO score requirements. Borrowers who have bad credit will need to first assess their FICO scores and credit history before deciding to apply for a mortgage loan.

In general, you may find that participating lenders require FICO scores in the mid-600 range for the most favorable rates and terms.

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How To Get A Fha Mortgage After A Chapter 7 Bankruptcy

Chapter 7 Bankruptcy: You must be discharged from the Chapter 7 for at least 2 years. You must have re-established your credit and have no derogatory information on your credit file in the last two years. You must not only have a 580 credit score but you must have active tradelines on your report since the bankruptcy that are in good standing. You must also have a very good explanation for why you filed the bankruptcy and why it will never happen again.

Ways To Improve Your Credit Score

The first step towards improving your credit score is improving your financial life. This involves learning how to budget and avoid spending beyond your means. For most individuals, this will go a long way towards preventing future bankruptcy, and it will also improve their credit scorea ranking system used by banks and lenders to determine a potential borrower’s sense of trustworthiness in regards to repayment. Bad credit indicates there is a risk in lending someone money, while good credit indicates the opposite.

Using cash instead of credit cards, not spending more than 33% of your income on housing, shopping wisely, and avoiding unnecessary expenses such as lavish vacations or expensive vehicles can go a long way towards improving your credit score.

You will need to establish some credit. One popular strategy involves taking out a secured credit card or one with a small credit line, using it for a small recurring bill every month, and making timely, in-full payments on it to rebuild your credit score.

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Guide To Buying A House After Bankruptcy

If youve had to declare bankruptcy, you may feel like youll never be able to get your finances in order again. And worse, you may feel like youll never have a house of your own again.

But the reality is that bankruptcy isnt a permanent mark on your financial record. Although your credit score will plummet when you declare bankruptcy, the Consumer Financial Protection Bureau found that those who declare bankruptcy often have higher credit scores when compared to those who try to work out difficult finances without resorting to bankruptcy.

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