This BLOG On VA Loan With Prior Mortgage Included In Bankruptcy Was Written By Gustan Cho NMLS 873293 of GCA Mortgage Group
VA Home Loans is the best mortgage loan program in the United States. Only active serviceman and woman, retired veterans, reservists, spouses of deceased veterans, and National Guard members of our military with a valid Certificate of Eligibility (COE) are eligible for this unique loan program. The creation and implementation of VA Home Loans was a thankful gesture by our government for the appreciation of our veterans.
- The Department of Veterans Affairs is not a lender
- Veterans Affairs does not originate nor fund home loans
- Private lenders originate VA Loans
- The role of VA is to partially insure and guarantee VA mortgages funded by lenders in the event homeowners default and foreclose on their homes
- In order for Veterans Affairs to insure defaulted loans, lenders need to adhere to VA Mortgage Guidelines
- Any homeowners who do not meet VA Guidelines, VA will not insure and guarantee them against the loss due to borrower default
- Due to this government guarantee, lenders are able to offer VA Loans with no money down, 100% financing, no mortgage insurance, and lower than conventional mortgage rates
VA Credit And Income Guidelines
The U.S. Department of Veterans Affairs has created and implemented very lax credit and income guidelines to make veterans easier to qualify for VA Loans.
- VA realize that veterans may have less than perfect credit than their civilian counterparts due to deployment
- There are mandatory wait periods to qualify for VA Loans after housing event and Chapter 7 Bankruptcy of two years
- For FHA Loans, there is a three year waiting period after housing event and two year waiting period after Chapter 7 Bankruptcy
- Borrowers can qualify for VA and FHA Loans one year into their Chapter 13 Bankruptcy Repayment Plan with Trustee Approval
- Both VA and FHA Loans do not have any waiting period after Chapter 13 Bankruptcy discharged date
- Outstanding collections and charged off accounts do not have to be paid to qualify for both VA and FHA Loans
- Both VA and FHA Loans allow manual underwriting
- There is no credit score requirements and no debt to income ratio caps on VA Mortgages
Common VA Lender Overlays
What overlays are additional lending requirements above and beyond of those required by the Department of Veterans Affairs.
- Most mortgage companies require a 620 to 640 credit score and has 43% to 50% debt to income ratio caps when VA does not require that
- VA does not have any minimum credit score requirement
- VA does not have any debt to income ratio caps
- Lenders requiring a certain credit score or DTI requirement is due to them having their own internal overlays
- Gustan Cho Associates Mortgage Group has no overlays on government and conventional loans
We will be discussing on VA Loan With Prior Mortgage Included In Bankruptcy on this blog.
Waiting Period To Qualify VA Loan With Prior Mortgage Included In Bankruptcy
There are certain requirements with regards to waiting period to qualify for VA Loan With Prior Mortgage Included In Bankruptcy.
- If a consumer had a mortgage or mortgages included in their Chapter 7 bankruptcy, there is a four year wait period from the discharged date of Chapter 7 to qualify for VA Loans
- The consumer cannot have reaffirmed the mortgage
- The housing event (foreclosure, deed in lieu, short sale) needs to be finalized
- There is no waiting period after the housing event
- The four year waiting period clock starts from the Chapter 7 discharged date
- Veterans who included a prior VA Loan in their Chapter 7 Bankruptcy need to make sure if they have enough Entitlement left to qualify for another VA Mortgage
If another type of mortgage was included in Chapter 7 Bankruptcy and the VA Entitlement was not effected, then veterans will have full entitlements.
Qualifying For VA Home Mortgage With Direct Lender With No Overlays
Not all lenders have the same lending requirements on VA Home Loans. Just because a borrower was denied by a lender does not mean that they will not qualify with a different lender. Most lenders have overlays on government and conventional loans. VA does not require a minimum credit score requirement. VA does not have any debt to income ratio caps. However, most lenders will require a 620 to 640 credit score. Again, most lenders will have 43% to 50% debt to income ratio caps when VA does not require it. Gustan Cho Mortgage Group has no overlays on government and conventional loans. This means we do not have a credit score nor debt to income ratio requirements. To start the pre-approval process, contact GCA Mortgage Group at 262-716-8151 or text us for faster response. We are available 7 days a week, evenings, weekends, and holidays.