VA Eligibility Guidelines After Chapter 13 Bankruptcy

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss VA eligibility guidelines after Chapter 13 Bankruptcy. VA loans are the best mortgage program for owner-occupant primary homes. However, not everyone can qualify for VA loans. You need to be an active and/or retired member of the U.S. Armed Services with a valid certificate of eligibility (COE) and/or surviving spouse of an eligible veteran. Veteran homebuyers who are either in Chapter 13 Bankruptcy Repayment Plan and/or have recently gotten a Chapter 13 Bankruptcy discharge can now qualify for VA loans. Gustan Cho Associates empowered by NEXA Mortgage, LLC NMLS 1660690 is a five-star national mortgage company licensed in 48 states with over 160 wholesale lenders. Most of our wholesale mortgage lenders have no lender overlays on VA loans.

What Are the VA Loan Eligibility Requirements After Chapter 13 Bankruptcy

Under VA Chapter 13 Bankruptcy Guidelines, the following lending guidelines apply:

  • Veteran Borrowers can qualify for a VA loan one year into a Chapter 13 Bankruptcy Repayment Plan
  • There is no waiting period to qualify for VA loans after the discharge of Chapter 13 under VA Eligibility Guidelines After Chapter 13 Bankruptcy.
  • VA does not have minimum credit score requirements.
  • However, Veteran Borrowers will need an approve/eligible per AUS.
  • The best chance of getting Automated Underwriting System Approval is having at least a 580 credit score.
  • There are no caps on the debt-to-income ratio on VA Loans under VA Eligibility Guidelines After Chapter 13 Bankruptcy.
  • However, Veteran Borrowers with higher debt-to-income ratios should have residual income, compensating factors, and reserves.
  • Under VA Eligibility Guidelines After Chapter 13 Bankruptcy, all VA loans without 2-year seasoning after Chapter 13 Bankruptcy discharge are manual underwriting.

About VA Loans and VA Eligibility Guidelines After Chapter 13 Bankruptcy

The United States Department of Veterans has implemented VA loans for members of the United States Armed Forces, veterans, and their spouses. The purpose of VA loans is to offer its members an affordable mortgage loan program through the VA Loan Guarantee Program. The main advantage of VA Loan Programs is that no down payment is required and its members can get 100% financing with no mortgage insurance premium required and no money out of pocket to make homeownership affordable to its members.

Mechanics Of VA Eligibility Guidelines After Chapter 13 Bankruptcy

The United States Congress has created the VA Home Loan Guaranty Program more than 70 years ago to take care of members of the United States Armed Forces and its Veterans. This program was created as part of the Servicemen’s Readjustment Act of 1944 and its main mission was to take care of our post-war veterans. Veterans who served in our World Wars did not have credit so the VA Loan Program had lenient credit standards. VA loans are very popular today with over 20 million VA loans closed since 1944.

VA Eligibility Guidelines After Chapter 13 Bankruptcy For Homebuyers

VA Eligibility Guidelines After Chapter 13 Bankruptcy For Homebuyers

To qualify for VA loans, there are eligibility requirements which include income requirements, asset requirements, and credit requirements as well as minimum years of service. Years of service in the military depends on whether the veteran served during wartime or peacetime Veterans who have served during World War II,  Korean War, or Vietnam War qualify for VA benefits after 90 days of active duty with a discharge any other than a dishonorable discharge For those veterans who have served in the military during peacetime from 1947 through 1981, to receive VA loan benefits, the veteran needs to prove that a minimum of 181 days of continuous active duty was served and any discharge other than a dishonorable discharge.

VA Eligibility Guidelines After Chapter 13 Bankruptcy For Disabled Veterans

For Veterans who have disabilities resulting from their active duty, disabled, the minimum mandatory 90 days to 181 days requirements are fully waived VA loan benefits are also extended to members of the following:

  • National Guard as well as Reserves
  • NOAA members ( National Oceanic and Atmospheric Administration), Coast Guard, and public health service members
  • U.S. Coast Guard

Spouses of deceased veterans can be eligible for VA loan benefits.

Advantages Of VA Loans

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 benefit if in the future mortgage rates do not remain at historic lows as it is today. It can be a great selling point.

VA Lenders with No Lender Overlays on VA Loans

VA Lenders with No Lender Overlays on VA Loans

Gustan Cho Associates Mortgage is a mortgage company licensed in multiple states with no overlays on VA loans. We have no lender overlays on all government and conventional loans. 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 [email protected] We are available 7 days a week, on evenings, weekends, and holidays.  

How Can I Qualify For VA Loans After Filing Chapter 13 Bankruptcy?

It’s possible to get a VA home loan after filing for Chapter 13 bankruptcy.  However, the borrower needs to be in a Chapter 13 bankruptcy repayment plan for at least 12 months. There is no waiting period following a Chapter 13 discharge. Applicants can qualify for a VA loan after making 12 timely payments to their plan if the bankruptcy trustee approves. Those who fail to make their bankruptcy plan payments won’t qualify for VA financing. Lenders want to see timely payments during the Chapter 13 bankruptcy repayment plan.  No late payments after Chapter 13 bankruptcy discharged date. Prequalify for a VA home loan in about five minutes. 

VA Eligibility Guidelines After Chapter 13 Bankruptcy Versus Chapter 7 Bankruptcy

All lenders require borrowers to meet minimum VA guidelines mandated by the Department of Veterans Affairs. However, lenders can impose overlays, which are stricter requirements than the VA lays out. For example, the VA does not have a minimum credit score requirement. However, a lender may require a 620 credit score. Others may require a longer waiting period after bankruptcy. Gustan Cho Associates has no lender overlays on VA loans.

VA Has No Maximum Debt to Income (DTI) Ratio

VA loans do not have a maximum debt to income ratio on debt to income ratio. This normally holds true even for applicants with a Chapter 13 bankruptcy. However, most lenders want to see VA loans with debt to income ratio no greater than 41%. Gustan Cho Associates can approve manual underwriting files with a debt-to-income ratio as high as 65% as long as you have sufficient residual income.

The Importance of Residual Income For Borrowers With High Debt to Income Ratio

Residual income is another way to qualify borrowers by seeing how much income is left after they pay their bills. It makes sense because you could have a DTI of 60% of your income is $10,000 a month and you pay $6,000 for bills. That would disqualify you under most DTI guidelines. But that still leaves you $4,000 in residual income. Under residual income guidelines, you’re more likely to qualify. See today’s mortgage rates. 

VA Eligibility Guidelines After Chapter 13 Bankruptcy on Credit Score Requirements on VA Loans

VA Eligibility Guidelines After Chapter 13 Bankruptcy on Credit Score Requirements on VA Loans

The VA has no minimum credit score requirements. Even for loans after a Chapter 13 bankruptcy. However, you need a clean credit history for at least 12 months to re-establish credit if you have derogatory things like collections, bankruptcy, foreclosures etc.

VA Agency Guidelines Versus VA Eligibility Guidelines After Chapter 13 Bankruptcy

Here are the basic VA agency guidelines. Gustan Cho Associates works within these guidelines with no overlays:

  • No minimum credit score requirements on 100% financing
  • No maximum debt to income ratios
  • The VA mortgage loan approval comes from an automated underwriting system (AUS)
  • You don’t have to pay outstanding collections and/or charged-off accounts
  • There is a two-year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu or short-sale
  • Residual income is determined by AUS
  • Verification of rent required for manual underwriting
  • No waiting period after Chapter 13 Bankruptcy discharge
  • Qualify during Chapter 13 Bankruptcy after 12 timely payments with trustee approval

Manual underwriting is required for all VA loans during the bankruptcy period and within two years of discharge.

Ask the Experts at Gustan Cho Associates About the VA Eligibility Guidelines After Chapter 13 Bankruptcy

Not all lenders will qualify borrowers for VA loans after Chapter 13 bankruptcy. Most lenders have overlays and may require borrowers to wait one or two years to qualify. However, Gustan Cho Associates has no overlays for VA loans. Please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected] We are available 7 days a week, on evenings, weekends, and holidays. Get a custom mortgage quote now.