VA LOAN CAPTAIN BLOG & Learning Center

Two Year Waiting Period for Bankruptcies

By: Grant Moon 10/30/14 03:46 pm

Our economy seems to be doing much better as of late. Q2 GDP finished up nicely at 4.5% growth and the initial Q3 released today showed another 3.5% burst. That’s some pretty good news considering where we were just a few short years ago. Unemployment rates hit double digits for a time and many filed for bankruptcy. Bankruptcies stay on a credit report for seven years but that doesn’t mean a veteran has to wait that long to finance a home with a VA loan. In fact, VA loans treat bankruptcies more favorable than conventional mortgages.

Getting a VA loan after a bankruptcy means waiting at least two years since the discharge while reestablishing credit. Conventional loans have a four year waiting period. With a Chapter 13, it’s even possible to use a VA loan 12 months after a Chapter 13 filing as long as the monthly payments have been made on time along with the Trustee’s permission. Even though VA loans are more lenient in this regard, they still outperform any other home loan in the market today.

Potential borrowers need to establish at least three credit lines while also showing a timely rental or housing payment history as well. If the veteran can provide such documentation, then a VA loan may be had sooner rather than later and rates are still near historic lows.

With a recent bankruptcy it is critical that absolutely no payments be marked more than 30 days past the due date after a bankruptcy has been filed and discharged. Doing so will nullify any chance for a VA loan. If you or someone you know has experienced a bankruptcy and have VA eligibility, it might be time to jump back in and buy that next house. There’s no need to wait seven years. Or even four. They might be eligible right now.

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