In this article, we will cover and discuss VA  foreclosure guidelines in qualifying for VA loans. VA Foreclosure Guidelines require a two-year waiting period after a housing event to qualify for VA Loans.VA Foreclosure Guidelines are less strict than other loan programs. A housing event is a foreclosure, deed in lieu of foreclosure, or short-sale.

VA Foreclosure Mortgage Guidelines Versus Other Loan Programs is more lenient.

• The waiting period is shorter after a housing event on VA loans than any other home mortgage programs
• VA Loans is the best home mortgage program for owner-occupant primary home buyers
• Lenders are more than willing and eager to offer 100% financing with no down payment required at lower rates than conventional loans due to the government guarantee
• VA loans does not require annual mortgage insurance
• There is no maximum loan limit on VA loans
• There is no minimum credit score requirements on VA loans as long as you can get an approve/eligible per automated underwriting system (AUS)

There is no maximum debt to income ratio caps on VA loans as long as the borrower gets an AUS Approval.

VA Foreclosure Guidelines Versus FHA Loans

HUD, the parent of FHA, requires a three-year waiting period after a housing event. Fannie Mae and Freddie Mac have a four-year waiting period after a short sale or deed in lieu of foreclosure and a seven-year waiting period after a standard foreclosure. NON-QM Loans do not have any waiting period requirements after a housing event. However, non-QM loans do require a 10% to 20% down payment requirement. In this blog, we will discuss VA Foreclosure Guidelines and qualifying for VA Loans after a housing event. Speak With Our Loan Officer for FHA Loans

VA Foreclosure Guidelines On Buying A Home After Housing Event

VA Foreclosure Guidelines mandates a waiting period after the foreclosure, deed in lieu of foreclosure, short sale to qualify for a VA loan. Unlike other loan programs, VA Foreclosure Guidelines make it able for borrowers to qualify for a VA loan just two years after a housing event. FHA and USDA require a three-year waiting period.

Conventional loans require a four year waiting period after a deed in lieu of foreclosure and/or short sale and 7 years after a foreclosure. Whether you have defaulted on a VA loan or other loan program, the waiting period to qualify for a VA loan after a housing event is a two-year waiting period.

VA Home Loan Eligibility Requirements

VA loans are the best owner-occupant home mortgage program in the United States. Our government created and launched VA Loans through the U.S. Department of Veterans Affairs (The VA) to reward our active and retired members and eligible surviving spouses of our Armed Services. VA does not require any down payment. Eligible veterans with a valid Certificate of Eligibility (COE) are eligible to purchase a home with a VA loan with 100% financing.

There is no other mortgage program that is better than VA loans:

• However, only active and/or retired members of the United States Armed Services with a valid Certificate of Eligibility (COE) can qualify for VA Loans
• Spouses of eligible veterans may also be eligible for VA Loans
• The VA created and launched VA Mortgages to reward our members of the U.S. Military for their service
• Military Personnel, in general, has lower credit profiles than their civilian counterparts
• This is because they often have a hard time paying their bills while they are deployed overseas
• Service Personnel often get transferred every two to three years to different bases
• It is common to have oversight for veterans in paying their bills timely
• Due to this reason, the VA has lightened credit/income requirements and standards on VA Loans
• The VA has much lenient mortgage guidelines than other loan programs

 VA Minimum Credit Score Requirements

There are no minimum credit score requirements or debt to income ratio caps on VA loans.  Loan Limits on VA loans are capped at $647,200. Loan limits are higher on high-cost areas. The VA has lenient credit and income lending guidelines than other loan programs. The VA understands that veterans can have a lower credit profile than their civilian counterparts due to being deployed or being transferred to other stations year after year. Gustan Cho Associates has no overlays on VA loans.

Qualifying For A VA Loan After A FHA And/Or Conventional Loan Foreclosure

Homeowners who had a prior foreclosure on a non-VA loan such as a conventional or FHA loan, there is a two-year waiting period to qualify for a VA loan. Borrowers can qualify with their full VA entitlement on a new VA loan with a prior foreclosure with a mortgage that was a conventional or FHA loan. There is only a one-time entitlement on a VA loan. So as long as the foreclosed loan was not a VA Loan, the borrower will have their full VA entitlement. Qualify for a VA loan after conventional loan foreclosure

VA Foreclosure Guidelines In Getting A New VA Loan After A Prior VA Loan Foreclosure

Defaulting on a prior VA loan may affect getting a new VA loan after a foreclosure. There is a two-year waiting period to qualify for a VA loan after a foreclosure However if the prior foreclosure was on a VA loan, borrowers may have limited VA entitlement on their new VA loan. New home buyers need to determine how much VA Loan Entitlement they have left if they foreclosed on a prior VA Mortgage.

VA Entitlement

Borrowers need entitlement every time they are purchasing a home with a VA loan. Every time a borrower defaults on their VA loan, they lose the VA entitlement they utilize in purchasing their home. They can regain their VA entitlement if they repay the VA in full. However, the chances are that the veteran did not use their full entitlement on their foreclosed VA loan.

Most borrowers will have enough VA entitlement to qualify for another VA loan after a prior VA loan foreclosure. One of our experienced loan officers can go over the veteran’s Certificate Of Eligibility (COE) to determine how much entitlement they have left and whether or not it is sufficient to qualify for another VA loan.

Mortgage Guidelines After Bankruptcy And/Or Housing Event

All government and conventional loan programs have mandatory waiting period requirements to qualify for home loans.

• HUD, the parent of FHA, requires a three year waiting period after foreclosure, deed in lieu of foreclosure, short sale
• The waiting period is two years after Chapter 7 Bankruptcy discharge date on FHA Loans
• USDA Loans require a three year mandatory waiting period after foreclosure, deed in lieu of foreclosure, short sale and/or bankruptcy discharge date
• Fannie Mae and Freddie Mac require a four-year waiting period requirement after a short sale and/or deed in lieu of foreclosure on conventional loans
• There is a seven-year waiting period after a regular foreclosure to qualify for conventional loans
• There is a four-year waiting period to qualify for conventional loans after Chapter 7 Bankruptcy discharge
• There are a four-year waiting period requirements after Chapter 13 Bankruptcy dismissal date to qualify for conventional loans
• The waiting period is two-year after the Chapter 13 Bankruptcy dismissal date

On the next paragraph, we will discuss VA Foreclosure Mortgage Guidelines After A Housing Event.

VA Foreclosure Mortgage Guidelines On VA Loans

VA has the shortest waiting period requirements after foreclosure, deed in lieu of foreclosure, short sale, and bankruptcy.

• There is a mandatory two-year waiting period requirement after a foreclosure, deed in lieu of foreclosure, short sale, and Chapter 7 Bankruptcy discharge date to qualify for VA Mortgages
• The waiting period start date after foreclosure and/or deed in lieu of foreclosure is the recorded date of the housing event. It is not the day the homeowner has turned their keys into their lender
• If the prior mortgage loan that was foreclosed was a VA Loan, the borrower needs to check to see if they have sufficient entitlement on their VA Certificate Of Eligibility (COE)

If the property that was foreclosed was any other loan besides a VA Loan, the borrower should still have full entitlement on their COE. Speak With Our Loan Officer for Mortgage Loans

Non-QM Mortgages With No Waiting Period Requirements After Foreclosure

Home buyers who do not want to wait for the mandatory 2-year waiting period requirements after foreclosure, deed in lieu of foreclosure, short sale, bankruptcy, they can qualify for Non-QM Loans.

• Gustan Cho Associates offers non-QM mortgages one day out of bankruptcy and foreclosure with a 30% down payment
• After the 2-year waiting period is up, they can refinance their Non-QM Loan to a VA Loan
• Non-QM Loans have no mandatory waiting period requirements after foreclosure, deed in lieu of foreclosure, short sale, bankruptcy. 10% to 20% down payment is required
• There is no private mortgage insurance required on Non-QM Loans
• There is no maximum loan limit
• Mortgage rates on non-QM loans is dependent on the down payment and the borrower’s credit scores

How Do I Avoid Foreclosure?

To avoid foreclosure, acting quickly and communicating effectively with your lender is crucial. Start by contacting your lender when you realize you might have trouble making mortgage payments. Early communication allows you to explore options such as repayment plans or loan modifications.

The VA Foreclosure Guidelines provide specific procedures for veterans, emphasizing the importance of discussing all available options with your loan servicer to prevent foreclosure.

Another key strategy is to consider special forbearance or loan modification. Special forbearance temporarily reduces or suspends your mortgage payments during a financial hardship, giving you time to recover. Modifying a loan involves adjusting the terms of your mortgage to make payments more manageable.

VA home loans offer various modification and refinancing options tailored to veterans, including Interest Rate Reduction Refinance Loans (IRL), which can help lower monthly payments and reduce financial stress. Veterans can consult the VA’s housing assistance programs and speak with a VA loan technician to explore their options for personalized assistance.

What is the VASP Program for Veterans?

The Veterans Affairs Servicing Purchase (VASP) program is an initiative under the VA Foreclosure Guidelines aimed at helping veterans avoid foreclosure and stay in their homes. This program allows the VA to purchase defaulted VA-guaranteed home loans from mortgage servicers, modify them, and manage them directly. By doing so, the VA offers veterans more manageable payment terms, including fixed, below-market interest rates, which help make their monthly payments more affordable.

The VASP program is designed to be a last-resort option for veterans who have exhausted all other refinancing possibilities. To qualify, veterans must be in default for at least three months, have acceptable credit, show proof of income, and certify their intent to live in the home as full-time residents.

This program, part of the broader VA Home Loans framework, underscores the VA’s commitment to preventing foreclosures and supporting veterans in maintaining homeownership during financial hardships​​.

For more information and to determine eligibility, Gustan Cho Associates or the VA directly. The VASP program is a crucial tool within the VA Foreclosure Guidelines. It provides targeted support to ensure veterans can navigate financial difficulties without losing their homes. Speak With Our Loan Officer for VA Loans

How Do You Buy a Foreclosed Home?

Buying a foreclosed home can be a great way to purchase a reduced-price property. To start, it’s essential to familiarize yourself with the VA Foreclosure Guidelines and understand the different types of foreclosures, including pre-foreclosures, auction foreclosures, and REO (Real Estate Owned) properties. Research and find foreclosed properties using online listings or real estate agents specializing in VA home loans.

Getting pre-approved for a mortgage is crucial, as foreclosed homes often require a faster closing. Additionally, budgeting for potential repairs or renovation costs is important, given that foreclosed homes are sold “as-is.”

Once you find a property, thoroughly inspect it and hire a professional home inspector to identify any significant issues. Please make an offer for REO properties through the appropriate channel, whether at an auction or via a real estate agent. Ensure you have a clear title and consider purchasing title insurance.

After closing the deal, address necessary repairs or renovations before moving in or preparing the home for resale or rental. Understanding the VA Foreclosure Guidelines and leveraging VA home loans can streamline the process and provide additional support to veterans navigating the foreclosure market.

Qualifying For A VA Loan After A Housing Event With A Direct Lender With No Overlays

Gustan Cho Associates is licensed in multiple states with no lender overlays on VA Home Loans. If you are looking for mortgage consultant with no lender overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at alex@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays. Click here to apply forVA loan after housing event with lender with no overlays

FAQs: VA Foreclosure Guidelines In Qualifying For VA Home Loans

• 1. What are the first steps to avoid foreclosure? Acting quickly and communicating effectively with your lender is crucial to avoiding foreclosure. Start by contacting your lender as soon as you realize you might have trouble making mortgage payments. Early communication allows you to explore options such as repayment plans or loan modifications. The VA Foreclosure Guidelines provide specific procedures for veterans, emphasizing the importance of discussing all available options with your loan servicer to prevent foreclosure.

• 2. What strategies can help prevent foreclosure? Two key strategies to prevent foreclosure include special forbearance and loan modification. Special forbearance temporarily reduces or suspends your mortgage payments during a financial hardship, giving you time to recover. Loan modification involves adjusting the terms of your mortgage to make payments more manageable. VA Home Loans offer various modification and refinancing options tailored to veterans, such as Interest Rate Reduction Refinance Loans (IRRRL), which can help lower monthly payments and reduce financial stress.

• 3. What is the VASP program for veterans? The Veterans Affairs Servicing Purchase (VASP) program is an initiative under the VA Foreclosure Guidelines aimed at helping veterans avoid foreclosure and stay in their homes. This program allows the VA to purchase defaulted VA-guaranteed home loans from mortgage servicers, modify them, and manage them directly. By doing so, the VA offers veterans more manageable payment terms, including fixed, below-market interest rates. The VASP program is designed to be a last-resort option for veterans who have exhausted all other refinancing possibilities. Veterans must meet specific eligibility criteria to qualify.

• 4. How do I buy a foreclosed home? Buying a foreclosed home involves several steps. First, familiarize yourself with the VA Foreclosure Guidelines and understand the different types of foreclosures, including pre-foreclosures, auction foreclosures, and REO (Real Estate Owned) properties. Research and find foreclosed properties using online listings or real estate agents specializing in VA Home Loans. Getting pre-approved for a mortgage is crucial, as foreclosed homes often require a faster closing. Thoroughly inspect the property and consider budgeting for potential repairs or renovation costs. Once you find a property, make an offer through the appropriate channel and ensure you have a clear title, considering purchasing title insurance for added security.

• 5. What are the waiting period requirements for qualifying for a VA loan after a foreclosure? According to the VA Foreclosure Guidelines, there is a mandatory two-year waiting period after a foreclosure, deed instead of foreclosure, or short sale to qualify for a VA loan. This waiting period is shorter than those required by other loan programs, such as FHA and conventional loans. Additionally, veterans need to determine their VA loan entitlement if they had a previous VA loan foreclosure to understand how much entitlement they have left for a new VA loan.

This blog about VA Foreclosure Guidelines In Qualifying For VA Home Loans was updated on June 12th, 2024.