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This article covers VA Loan After Chapter 7 Versus Chapter 13 Bankruptcy

There are specific different agency guidelines for borrowers to qualify for a VA Loan After Chapter 7 Versus Chapter 13 Bankruptcy: Homebuyers can qualify for a VA loan after bankruptcy. HUD, the parent of FHA, has the exact same agency mortgage guidelines on FHA loans that VA loans have. FHA and VA loans are the only two loan programs that allow manual underwriting. VA and FHA loans are the only two loan programs that allow borrowers in an active Chapter 13 Bankruptcy repayment plan to qualify for a mortgage.

There are two types of consumer bankruptcy: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. The VA Agency Lending Guidelines are different on VA Loan After Chapter 7 Versus Chapter 13 Bankruptcy.

We will thoroughly detail the basic VA Agency Guidelines on qualifying for a VA Loan After Chapter 7 Versus Chapter 13 Bankruptcy in this blog. Borrowers need to meet mandatory waiting period requirements after bankruptcy to qualify for VA loans. The Department of Veterans Administration (VA) is the federal agency that creates and launches VA Agency Guidelines. The Agency Guidelines on VA loans are more lenient than other loan programs.

Statistics show members of the U.S. Military have lower credit profiles than their civilian counterparts. This may be due to the frequent military base transfers and/or deployment. VA loans have the lowest default rate of any other loan program.

VA Loan After Chapter 7 Versus Chapter 13 Bankruptcy Agency Guidelines

What are the bankruptcy agency guidelines under Chapter 13 of the Va loans

Mortgage borrowers can qualify for VA loans after bankruptcy. Borrowers must first meet the minimum VA agency mortgage guidelines.

Here are the basic mortgage guidelines administered by the Department of Veterans Administration (VA):

There are no minimum credit score requirements on VA loans with an approve/eligible per automated underwriting system
There is no maximum debt to income ratio caps on VA loans with an approve/eligible per automated underwriting system
Outstanding collections and charged-off accounts do not have to be paid off to qualify for a VA home mortgage
Manual underwriting is allowed on VA mortgages
There is a two year waiting period after the Chapter 7 Bankruptcy discharged date
There is a two year waiting period after a foreclosure, a deed in lieu of foreclosure, a short-sale to qualify for VA loans
The only co-signer allowed is the veteran’s spouse
Non-occupant co-borrowers are not allowed on VA loans
Deferred student loans that have been deferred for longer than 12 months are exempt in debt to income ratio qualifications
Non-deferred student loans are calculated as follows: Take 5% of the outstanding student loan balance and divide it by 12 months
The resulting figure will be number used as a hypothetical debt
There is no maximum loan limit on VA home mortgages as of January 1st, 2020

Gustan Cho Associates is a national five-star mortgage company with no lender overlays on VA loans.

VA Loan After Chapter 7 Versus Chapter 13 Bankruptcy: Chapter 13 Bankruptcy Agency Mortgage Guidelines

As mentioned earlier, there is a two-year waiting period after the Chapter 7 Bankruptcy discharged date. Homebuyers can qualify for VA home mortgages during the Chapter 13 Bankruptcy repayment plan after 12 months into the plan. Chapter 13 Bankruptcy does not have to be discharged. The bankruptcy trustee needs to approve the home purchase which is no issue.

Many home buyers often worry the trustee will not sign off on a home purchase. The team at GCA Mortgage Group has helped thousands of homebuyers purchase homes during the Chapter 13 Bankruptcy repayment period. We never had a trustee not sign off on a home mortgage. There are no waiting period requirements after Chapter 13 Bankruptcy to qualify for VA loans. If the Chapter 13 Bankruptcy has not been seasoned for at least two years, the VA loan needs to be manually underwritten.

Gustan Cho Associates are experts in manual underwriting and helping borrowers who are in an active Chapter 13 Bankruptcy repayment plan qualify for VA loans. Gustan Cho Associates Mortgage Group has no lender overlays on VA loans. Over 75% of our borrowers are folks who either got a last-minute mortgage loan denial at another lender or could not qualify at other lenders due to their lender overlays. At GCA Mortgage Group, we have zero overlays on government and conventional loans.

Lender Overlays Versus Agency Mortgage Guidelines On VA Loans

What are the lender's overlays and the mortgage agency guidelines for VA loans

Not all lenders have the same VA lending requirements and guidelines. Therefore, just because VA LENDER A denies you for a VA loan does not mean VA LENDER B cannot approve you. All lenders need to follow the minimum VA lending guidelines. However, lenders are allowed to have higher credit standards that are above and beyond the minimum VA Agency Mortgage Guidelines. For example, there are no minimum credit score requirements on VA loans. However, most lenders will require a 620 to 680 credit score requirement on VA loans even though the VA does not require a minimum credit score requirement.

The minimum credit score required by the lender is called a lender overlay on credit scores. Same with debt to income ratios. The VA has no maximum debt to income ratio cap on VA loans. Most lenders will cap debt to income ratios at 45% to 50% as part of their lender overlays. Gustan Cho Associates is one of the very few national mortgage companies with zero lender overlays on VA loans. We just go off the automated underwriting system findings and have no other lender overlays on VA loans.