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VA Loan after Ch 7 - credit back to 700 beacon score

We had a house foreclosed on in December 2009, filed ch 7 that was discharged in September 2010.  My husband had a VA loan and used a portion of his certificate of eligibility one time, that house was sold in the late 90s with no issues.  Since our foreclosure and ch 7, we have worked hard to re-build our credit.  We recently bought a used vehicle and the dealer told us our beacon score was "almost 700".  We have saved $10,000, and also have access to retirement accounts for down payment (approximately $20,000).  Steady jobs, no late payments at all since ch 7, lived in the same rented home for 3 years.  Can we qualify for VA loan even though it hasn't been a full 2 years from ch 7 or 3 years from foreclosure?  Thanks in advance.
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March 26 2012 - Dawsonville
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Answers (3)

It is possible to do a VA purchase with a bankruptcy discharged between 1 and 2 years. You would not qualify for a conventional loan. VA or FHA would be your options. The VA advantage is no mortgage insurance. Rates on both would be similar. You need to have a mortgage lender look at your credit write a letter of explanation why the credit issues happened and why they will not happen again, gather all your income documents (2-3 years complete Federal taxes, 30 days of paystubs,all asset statement, all pages and meet with a lender. You will not be penalized much on rate. Your rate will be determined by your credit scores and loan size and state. Good Luck
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March 26 2012
As an agent, I have never heard of a VA program that will let you buy at this time, unfortunately.  Lenders are loosening credit terms ever so slightly, so you might be able to find something at the 2 year mark from when it was discharged, but even then, you are likely to have to wait until the 3 year mark.  

You don't need to use a VA program (which is extremely restrictive) since you have a down payment. You might even be able to qualify for a conventional loan at the 2 year mark.  However, the earlier you try, the tighter the requirements will be and possibly higher interest rates.

A lender will likely respond with a more detailed response, so I wish you the best!
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March 26 2012
Depending where you live this advice might help. In California a bankruptcy and foreclosure will affect you buying potential for 7 yrs. They are going to look at your job history and reserves in you bank/retirement accounts to ensure that you will not default again. That being said potentially you can get a loan for a property but you're going to get a higher interest rate, since your a bigger risk to the lender, and you're going to have a substantial down payment. If you're okay with everything I stated then you talk with a lender and start crunching some numbers.
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March 26 2012
 
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VA Loan after Ch 7 - credit back to 700 beacon score
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