VA Loan after Bankruptcy | Only 2 Year Wait for Orange County Veterans

get a va loan after bankruptcyGetting a VA loan after bankruptcy is not as difficult as many think. While most loan programs require anywhere from a 3 year (FHA) to 4 year (Conventional) to even 7 year (some Jumbo programs) wait period after a bankruptcy, the VA program only requires a 2 year wait after the discharge of a bankruptcy.

VA Loan After Chapter 7 Bankruptcy

Depending on the type of bankruptcy, the wait period could even be shorter. For a Chapter 7 bankruptcy, which is total discharge of debts, 24 months must pass from the date of discharge to the loan approval. And while some VA lenders will have “overlays”, or their own guidelines which may be tougher than standard VA guidelines, an eligible Orange County Veteran who knows how flexible VA can be will have a better shot at buying a home sooner rather than later by working with a lender with minimal VA guideline overlays.

Another important thing to know is that many VA lenders will allow a two year wait for loans under $417,000. But for VA loans over $417,000 they will require a longer wait. For Veterans in Orange County, where home prices are high and where the 100% financing limit in 2016 is $625,500, working with an Orange County, CA VA lender who will allow only a 2 year will be the difference between buying a home and not buying a home in 2016. This means it is possible to purchase a condo, within a VA approved condo project in Orange County, only two years after a discharged bankruptcy.

VA Loan Immediately After Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is a restructuring of debt. In most cases the debts are not “discharged”, but are instead paid off over a specified time period. For example, if a Veteran has $25,000 in credit card debt, the court may create a payoff plan over a 3 or 5 year time period. It is actually possible to get a VA loan before the Chapter 13 is even discharged. If a perfect 24 month payment history in the Chapter 13 is proven then the Veteran can get VA financing. It is even possible to use a VA cashout refinance to pay off a Chapter 13. For someone looking to buy a home, there is no wait period after the discharge of the bankruptcy if they were in the Chapter 13 for at least two years and had a perfect payment history. (If you are in chapter 13, do not miss a payment.)

VA Loan After Foreclosure

The VA guideline for getting a loan after a foreclosure mirror their bankruptcy rules. Only a 2 year wait period is required. Even for loans oner $417,000. This is important to know because a very common overlay for VA lenders to is require between 4 and 7 years wait after foreclosure on for loans over $417,000.

Jumbo VA Loans and Bankruptcy

Understanding what a Jumbo VA loan is and how it enables a Veteran to finance a high priced home even after bankruptcy or foreclosure can be beneficial for a Veteran who may have had a rough financial stretch a few years ago. While most Jumbo loan programs are very restrictive when it comes to prior bankruptcies and foreclosures, the VA Jumbo program follows the standard VA guidelines of only a 2 year wait. Again, not all lenders follow the standard guideline, so knowing the guidelines and finding a local Orange County VA lender who follows the guidelines is important.

FICO Score Requirements for VA Loans

Technically VA does not have an official guideline for a minimum FICO score. Most lender will not go below 620 for loans under $417,000 and 640 for loans over $417,000. However, there are lenders who will go down to a 580 FICO score.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Orange County VA Home Loans After Foreclosure or Short Sale

Orange County Veterans who have had a short sale are able to purchase a home with $0 down immediately after the short sale. Veterans who have had a foreclosure need to wait two years. VA is relatively flexible in how they look at foreclosures and short sales, compared to FHA and Fannie Mae.

Short Sale versus Foreclosure

A short sale occurs when a home owner sells their home, even though they owe more than the home is worth. Their Orange County home loan lender needs to sign off on the home sale, since it is the bank who will be taking a loss on the property if it is sold.  A short sale can help to preserve a home owners credit compared to going through a full fledged foreclosure. FHA typically requires 3 years after a foreclosure or short sale, unless extenuating circumstances can be proved as the reason for the short sale.  Fannie Mae requires between 4 and 5 years after a foreclosure, but will lend to 80% of the properties value only two years after a short sale. But VA, at least for those that are eligible, will lend to 100% of the properties value up to the county VA loan limits. The VA Loan limits in Orange and Los Angeles counties, the $0 down loan limit is $679,650 in 2018.

Veterans Need Perfect Credit After Foreclosure or Short Sale

The only catch is that the Orange County veteran will need perfect credit since the short sale or foreclosure.  Especially over the most recent 12 months. Many times, leading up to the short sale, the seller may have multiple mortgage lates, possibly 90 or 120 day lates. This can really weigh the credit report down and hurt the FICO score. This is why it is important to reestablish credit immediately after the short sale, or foreclosure, and n0t have any more lates after the sale of the home.

Quick Way to Find if you are Qualified for a VA Home Loan in Orange County, California

It is always important to get PreApproved for a VA loan prior to make an offer on a home. It is probably even more important to do after a short sale or foreclosure. Find a reputable VA loan expert in Orange County, CA, and have them prepare personalized VA loan scenarios which will give a breakdown of the purchase price, loan amount, closing costs, and amount needed to close. The VA loan officer can get the Automated Loan Approval, which is an important step in determining early on whether you can get a VA home loan to purchase a home. The key is to make sure to find someone with experience to get them job done easily and quickly,

Authored by Tim Storm, an Orange County, CA  VA Loan Officer – Please contact my office at Home Point Financial for more information about an Orange County, CA home loan.  949-640-3102. MLO 223456

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