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VA LOANS AND BANKRUPTCY

Even if you have filed for bankruptcy in your past, you may still be eligible for a VA loan. There are a few standards established by the Department of Veteran Affairs which serve as minimum guidelines that a lender must follow in dealing with such a case.

Veterans applying for a VA loan who have been discharged from bankruptcy 5 or more years ago may have the bankruptcy disregarded on their loan application. This will ensure that the bankruptcy does not affect the application for a VA loan whatsoever.

In the circumstance that the bankruptcy was discharged within the past 3 to 5 years, the applicant must be given consideration for the VA loan. The bankruptcy will certainly be taken into account when deciding the veteran's eligibility, but with a satisfactory credit history since the time of the bankruptcy, the individuals may still be approved.

For veterans who have a bankruptcy 3 or fewer years ago, many lenders will generally not consider approving these individuals for a VA loan. However, in certain circumstances, exceptions can be made. Consideration will be given if the veteran can provide proof that the bankruptcy was cause of circumstances out of their control or if the individual has display a substantial amount of satisfactory credit history since the bankruptcy.

Keep in mind that the qualification standards for a VA loan are much more lenient than those of a conventional loan. Even if you do not qualify for a conventional loan, or are uncertain if you will qualify for a VA loan, contact your lender who can help you assess your eligibility.

Back to the Veterans' Loan Handbook Table of Contents.