VA Loan During Chapter 13 Bankruptcy

This BLOG On Qualifying For VA Loan During Chapter 13 Bankruptcy Was Written By Gustan Cho

Veteran home buyers with a Certificate of Eligibility can qualify for VA Loan During Chapter 13 Bankruptcy one year into the Chapter 13 Bankruptcy Repayment Plan. In order to qualify for VA Loan During Chapter 13 Bankruptcy, the borrower will need to have the approval of the Chapter 13 Bankruptcy Trustee which is normally not a problem.

Types Of Bankruptcies And VA Loans

There are two types of Bankruptcies available to consumers:

  • Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy

A Chapter 7 Bankruptcy is where a consumer has little to no income and is drowning in debt. Most debts can be discharged under a Chapter 7 Bankruptcy. It takes 90 days to have the consumer discharged with a Chapter 7 Bankruptcy. There is a two year waiting period to qualify for a VA Loan after the discharged date of a Chapter 7 Bankruptcy. A Veteran borrower can qualify for VA Loan one year into a Chapter 13 Bankruptcy repayment plan. The borrower needs to show proof of on time payments to their creditors for the past 12 months. There is no waiting period to qualify for a VA Loan after a Chapter 13 Bankruptcy discharged date.

What Are The VA Qualification Requirements During Chapter 13 Bankruptcy Repayment Plan

Here are the general requirements on VA Qualifying For VA Loan During Chapter 13 Bankruptcy:

  • Veteran Borrower needs a valid COE,  Certificate of Eligibility
  • Veteran Borrower needs to have made timely payments with no 30 day late payments for the past 12 months to all creditors named in the Chapter 13 Bankruptcy
  • Borrower needs to get approval by their assigned Chapter 13 Bankruptcy Trustee
  • Borrower needs at least a 580 Credit Score to qualify with The Gustan Cho Team. We do not have any lender overlays on VA Loans
  • Verification of Rent is required on all VA Loans that are manually underwritten. Verification of Rent is only valid if the renter can provide 12 months canceled checks paid to their landlord or bank statements reflecting outgoing transfers of the same amount of their rental payments to their landlord’s bank account
  • If the renter rents from a registered property management company, then a VOR Form provided by the lender to the property manager and completed by the property management manager can be used in lieu of the 12 months checks and/or 12 months of bank statements

VA Loan Requirements

VA Loans is the best mortgage loan program available to mortgage borrowers. However, not everyone qualifies for VA Loans. Here is the qualification requirements for VA Loans and a little about VA Loans:

  • VA Loans are only for Veterans who have served in the U.S. Military with a Certificate of Eligibility
  • VA Loans do not require the borrower to put any money down on a home purchase
  • The Gustan Cho Team are experts in originating and funding VA Loans With Bad Credit and VA Loans With Low Credit Scores with no VA Lender Overlays
  • VA does not require any mortgage insurance premium on VA Loans
  • VA does require a one time upfront funding fee on all VA Loans but the funding fee can be rolled into the VA Loan
  • VA does not have a credit score requirement. The minimum credit score on VA Loans is set by each individual mortgage lender. We require a minimum of 580 FICO Credit Score on VA Loans but have no VA Lender Overlays
  • VA Loans has very low mortgage rates. VA Lenders can offer the lowest mortgage rates on VA Loans even with 100% financing because the VA Loan is guaranteed by the United States Department of Veteran Affairs

Why Do Lenders Require Waiting Periods After Chapter 13 Bankruptcy Discharge Date On VA Loans?

Here are the requirements to qualify for VA Loan During Chapter 13 Bankruptcy Repayment Period And After Chapter 13 Bankruptcy Discharge Date:

  • A Veteran borrower with a COE can qualify for a VA Loan During Chapter 13 Bankruptcy one year into the Chapter 13 Bankruptcy Repayment Plan with the approval of the Chapter 13 Bankruptcy Trustee and verification of rent
  • 12 monthly timely payments of all creditors is required
  • We require a minimum 580 FICO Credit Score and have no overlays on VA Loans
  • We do not have any debt to income ratio requirement on VA Loans and just go off Automated Underwriting System approval. As long as the Veteran borrower has plenty of VA Residual Income, we can get an approve/eligible per AUS FINDINGS with debt to income ratios as high as 60% DTI
  • There is no waiting period to qualify for a VA Loan after a Chapter 13 Bankruptcy discharged date
  • The reason why some lenders disqualify Veteran borrowers for VA Loans during a Chapter 13 Bankruptcy Repayment Period is NOT BECAUSE OF VA GUIDELINES, BUT because of their own lender overlays on VA Loans
  • The reason why some lenders disqualify Veteran borrowers for VA Loans after a Chapter 13 Bankruptcy discharged date is NOT because of VA Guidelines BUT because of their own internal lender overlays on VA Loans
  • Lender Overlays are the individual lender’s own lending requirements on top of the VA Guidelines. Each mortgage lender can have higher lending standards than those of the U.S Department of Veteran Affairs and this is what you call lender overlays

If you need to qualify for a VA Loan During Chapter 13 Bankruptcy Repayment Plan or after a Chapter 13 Bankruptcy discharge with no waiting period, please contact Gustan Cho at 262-878-1965 or text Gustan Cho for faster response at 262-716-8151. You can also email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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