Can Someone Use Their VA Loan After Having A Foreclosure FHA Loan?

It will take an individual three to four years at best to be considered eligible for another mortgage, even one that is eligible for a VA insured loan. It doesn’t matter if the foreclosed loan was a FHA loan or one held by a private mortgage company. A foreclosure is a foreclosure, and on a credit report it is a very bad scar.

You have to do more than have served in the United States military in order to be eligible for a VA loan. There are certain restrictions as to which veterans are eligible. Furthermore, the VA does not issue the loans, but merely guarantees a certain amount of the loan given by another lender. If for any reason you default or foreclosure begins, that lender is guaranteed to receive at least a portion of the cost as insured by the VA. It is also important to note that if this occurs, you will lose your right to future VA insured loans.

An individual who is serious about obtaining another mortgage after foreclosure will take several steps to make certain that his or her second mortgage is a more successful transaction than the first. The following three critical steps are closely related and will ensure greater success the next time around.

1. Rebuilding credit is a critical step in the recovery process. Lower credit scores mean higher rates of interest, less reputable lenders, and approval for lower amounts than you may need. Absolutely no lender will consider you immediately after a foreclosure has taken place, so it is wise to seize this valuable time and rebuild your foundation one payment at a time. Eliminate excess debt as quickly is possible and make sure that from this day forward your credit is flawless—or at least improving.

2. Preparing a budget is necessary to rebuilding credit. Without a budget, you have no record or accountability for your spending. It is important to make sure all your bills are paid on time. After foreclosure, you have to work several times as hard to prove your viability as a worthwhile credit risk.

3. Saving for a down payment can increase the amount of home you’ll be able to buy and help mitigate the overall cost of the home. After foreclosure, you may be required to pay a higher down payment to reduce the amount you will need to borrow. This goes hand-in-hand with budget creation.