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Qualifying for a VA Home Loan After Bankruptcy in Orange County, CA

Qualifying for a VA Home Loan after BankruptcyBankruptcy has been on the rise since 2006. The market downturn has strained many people financially. Many Orange County residents sought the legal protection of bankruptcy to protect themselves and their families. But bankruptcy is an event not a person. For those looking to move beyond their bankruptcy and to qualify for a new VA home loan, keep reading. I also suggest that you read my last article

Generally, the guidelines for a new VA home loan after bankruptcy follow the same as FHA. However, it’s worth reviewing completely.


  1. A bankruptcy discharged for 2 years or more is generally disregarded by the VA. The borrower is considered a satisfactory credit risk.
  2. An Orange County borrower with a bankruptcy that has been discharged for less than 1 year is ineligible for a new VA home loan.
  3. If the bankruptcy was been discharged for more than 1 year but less than 2 years, it is still possible to get a VA home loan. Similar to an FHA home loan you’ll need the following:A.   Re-established credit. You will need to obtain new financing after the bankruptcy and be able to show a good re-payment history. Late payments or derogatory credit after the bankruptcy will not be allowed.B.   Extenuating circumstances. You’ll need to be able to prove that the bankruptcy was beyond your control. This would include a death, unemployment, prolonged strikes or medical bills not covered by insurance.
  4. If the bankruptcy was caused by the failure of a business the VA will require the following:
    1. The applicant obtained a full-time permanent position after the business failure.
    2. The applicant had no history of derogatory credit prior to the business failure.
    3. The applicant shows no derogatory credit history after the business failure.
    4. Failure of the business was not due to the applicant’s misconduct.
  5. Chapter 13 bankruptcy is when you enter into a repayment plan with your creditors. With a Chapter 13 bankruptcy, a borrower is able to get a new VA home loan if they meet the following criteria:
    1. They have completed making all of their payments to their creditors.
    2.  They have made 12 monthly payments on time and the court trustee or bankruptcy judge approves the new VA home loan.

For more frequently asked questions regarding bankruptcy and VA loans please go here.

So, you’ll find that there is hope for new home ownership after a bankruptcy. Orange County residents need to create a plan, get your financial affairs back on track and spend a little time on the sidelines. When you’re ready to create that plan to get off the sidelines and into a new VA home loan I would be happy to help you.

Scott Storace

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