What are VA Forbearance Guidelines

VA Forbearance Guidelines During The COVID-19 Outbreak

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About VA Forbearance Guidelines During The COVID-19 Outbreak

It is no secret that mortgage interest rates are near all-time lows and the mortgage industry is busier than normal.

  • The COVID-19 coronavirus outbreak has sparked a burst in the refinance market across the nation
  • Data shows there are trillions of dollars’ worth of mortgages that could save money by refinancing during this pandemic
  • With the Fed announcing interest rates will remain low until at least the summer of 2021, this is a great opportunity for you and your family to save money on your housing payment with a VA refinance
  • This is also a great time to utilize equity in your home to pay off existing consumer debt
  • In this blog, we will detail how to apply for a VA refinance during the COVID-19 coronavirus outbreak if you have entered into mortgage forbearance

VA Forbearance Guidelines During The COVID-19 Outbreak For Homeowners Financially Affected
VA Forbearance Guidelines During The COVID-19

As part of the CARES ACT signed into law by President Trump on March 27th, 2020, Americans are allowed to enter mortgage forbearance if struggling financially from the coronavirus outbreak.

  • Even if you did not lose your job, you are eligible for COVID-19 coronavirus mortgage relief
  • You may simply enter a forbearance program and your mortgage payments will be paused
  • This does come with some consequences if you plan to refinance or buy a property in the near future

It is important to understand that the months you are not making a payment, and in forbearance, will not count towards seasoning requirements for VA mortgage financing. Meaning late payments will be counted for the months before you entered into forbearance relief.

VA Forbearance Versus Other Loan Mortgage Programs

HUD recently charged the forbearance program for VA mortgages.

  • Below we will detail what steps you need to take to purchase or refinance a property utilizing a VA mortgage IF you have entered mortgage forbearance
  • For VA purchase and cash-out refinance transactions, a veteran is eligible to enter a new mortgage if they were not delinquent at the time of forbearance

All season requirements must be met prior to entering the forbearance program.

Waiting Period After Forbearance Requirements

Mortgage seasoning.

  • This is where we see a few changes implemented by HUD
  • Once again, for all VA refinances whether cash out or an interest rate reduction refinance loan, the timeframe for which the current mortgage is in forbearance may NOT be used to meet seasoning requirements
  • The most common seasoning requirement is the length of time after a late payment


If you had a mortgage late payment in August 2019, but you entered mortgage forbearance In June of 2020, you are not eligible until you exit forbearance and make at least two more mortgage payments. 12 months must elapse with on-time payments without including the time in forbearance.

VA Guidelines On Refinancing
VA Guidelines On Refinancing

Forbearance rules surrounding interest rate reduction refinance loan commonly referred to as VA IRRRLs

  • A veteran wishing to use an interest rate reduction refinance loan must be current with payments at closing or if a VA mortgage loan is paid off is over 30 days delinquent and time of closing the new loan must be submitted directly to the VA prior to approval
  • The only way you do not need direct approval through the VA is if the borrower has invoked the CARES ACT forbearance referring to the loan being refinanced
  • AND the borrower has provided information to establish that they are no longer experiencing financial hardship due to the COVID-19 coronavirus outbreak

Of course, the borrower must also qualify based on their credit per HUD IRRRL guidelines.

Note. All VA refinance mortgages including IRRRLs and cash-out refinance transactions must meet seasoning requirements, closing cost recruitment guidelines, discount point thresholds, and pass net tangible benefit requirements OR the loan will not meet refinance requirements per VA guidelines.

Seasoning Requirements After Forbearance To Qualify For A VA Loans
Seasoning Requirements After Forbearance To Qualify For A VA Loans

Recently, HUD has added some clarification when paying off a VA guaranteed mortgage during the COVID-19 epidemic.

  • Before you are eligible to refinance a VA guaranteed mortgage, your current loan must be seasoned for a period of time
  • Typically, this is 210 days from the signing of the note. It is important to understand that the time period in forbearance cannot count towards seasoning requirements
  • However, forbearance under the CARES ACT does not cause the loan to fail to meet seasoning standards
  • The required seasoning on the note date of the mortgage must not be less than 210 days
  • A veteran must also make at least six consecutive monthly payments to complete the season requirements

If a veteran entered into forbearance during the first six payments of his or her mortgage, the veteran must start remaking payments and have six consecutive payments to qualify to enter a new VA guaranteed mortgage.

Qualifying For A VA Loan With A Lender With No Overlays

If you are not in the mortgage industry, this more than likely sounds like a foreign language to you. We encourage you to reach out to Gustan Cho Associates today. We take pride in being experts surrounding VA mortgage guidelines. There is plenty of contradicting information online surrounding VA mortgage guidelines. Many banks deal with LENDER OVERLAYS. Gustan Cho Associates do not. For more information on your specific VA mortgage, please call Mike Gracz at (800) 900-8569. You may also email gcho@gustancho.com. About 75% of our clients have been turned down by their current lender or are not receiving the customer service they need. We are available seven days a week to answer your mortgage questions. We look forward to hearing from you and your family.

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  1. Hello – I started the forbearance Dec 2020 and am approaching my 6 month date. I have been able to make small payments on the mortgage while paying larger chunks on higher interest loans. This has helped me reduce overall debt. My thoughts are to continue the forbearance and use that money toward other debt as possible. However I am concerned with racking up $12k-$15k in past due amount. The current lender has told me they only offer 6 month repayment with half down or go through the VA modification. They said I can work with the VA on other repayment options (end of loan or longer payback period) but made it sound like a bigger effort.

    My current int rate is 4.25 with about 200k and 20 years left on the loan. I am trying to think through my options and it seems I will be streamlining/modifying either next month or in 6 months. I don’t want to have to go streamline/modification with out at least 1% int rate deduction. Do competing lenders offer irrrl streamline while in forbearance?

  2. My wife and I are looking to buy a house using a VA loan. We are first time home buyers and have bad credit that we have been working on. Our credit took a hit while I transitioned out of the Air Force, covid and my wife was in grad school. Now that she has started her career and I have my VA compensation and being in school money is not an issue but our credit has kept us from buying a home. We would at least love some Insight and information.

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