Many veterans believe that if they file for bankruptcy, they will not be able to utilize their VA Home Loan benefits. Having worked with military Veterans for the past 15 years, Victor Runkle hears this comment quite often. When he responds to the Veteran, he typically hears a sigh of relief!
Fortunately, the VA has the most liberal rules and guidelines than any other loan program for home buyers when it comes to this subject. The VA only requires 2 years from the date of discharge on a Chapter 7 bankruptcy; this is the bankruptcy that clears a person of all debt. When it comes to a Chapter 13 bankruptcy, where you pay a monthly payment to a Trustee, the VA only requires 12 months of payments to the Trustee to qualify for a VA loan.
The monthly payment to the Trustee must be considered as part of the monthly debt as well. Keep in mind; sometimes the VA will allow the use of VA Home Loan benefits sooner than the time frames I just mentioned. It goes on a case by case basis and, it must be proven that the bankruptcy was for reasons beyond your control.
One hidden fact that many people do not know about is the VA will allow approval for the use of a VA Loan if a house was foreclosed on and included in the bankruptcy. If the loan was a VA loan, then the VA needs to be contacted to see if there was an outstanding balance on the loan that the VA needed to pay. If it was not a VA loan then, it should be pretty simple to get an approval.
However, one thing the VA will require after bankruptcy is the reestablishment of your credit. This can be done with a secured credit card, where you deposit a certain of money, and the usage and monthly payments are reported to the credit bureaus. A trusted friend could put you as an authorized user on a credit card and even purchasing an inexpensive car with monthly payments will help establish credit.
One thing to remember is the VA has a zero-tolerance policy for 30-day late payments on credit after a bankruptcy. If it is an isolated thirty day late, a good explanation will usually be sufficient, but if there is more than one, it is usually a decline. The VA will require 2 years of good credit with no 30-day late payments since the date of the last 30-day late noted on a credit report.
Whatever you do, do not let a bankruptcy derail your hopes and dreams from owning a home. Take steps to reestablish your credit, make good on your financial obligations each month and before you know it you will be a homeowner!
How Do I Get My Certificate of Eligibility from the VA?
As an active qualifying service member, Veteran or qualifying surviving spouse, a VA Home Loan can be an excellent option. You have earned this benefit, and it is one of the last loans available that sometimes requires as little as zero down on a qualifying home.
Buying a home with your VA Guarantee does not need to be a difficult process. But it can be if you work with a REALTOR® who is not familiar with the VA buying process. Your Certificate of Eligibility verifies the amount and status of your VA Guarantee and will let your lender know if you qualify for a VA Home Loan.
One of the most important steps in the VA Home Loan approval process is obtaining your Certificate of Eligibility. You may already have your original Certificate, which can be verified online with your Lender. You may have lost it, and it can usually be requested online by your Lender. But if you would like to obtain a copy yourself, you may also contact the VA directly to determine eligibility.
The VA Guaranteed Home Loan allows a Lender who is approved to close VA Home Loans to offer a qualified applicant a VA Home Loan with favorable terms that are partially guaranteed by the VA. This assures the lender less risk when loaning up to 100% of a sales price. If you don't have your Certificate of Eligibility or have used it before and wonder if you still qualify, you don't need to order it to begin the process and find out if you qualify.
If you are Veteran, qualifying service member or surviving spouse, Victor appreciates your service and sacrifice. You don't need to navigate the process by yourself. As a Veteran himself, it is a pleasure for Victor to see his fellow service members and their families realize the dream of home ownership every day.