VA Loan Guidelines on Divorce and Credit:
Divorce itself is not considered an “extenuating circumstance” by VA guidelines. However, specific events tied to a divorce might qualify under certain conditions.
Understanding the One-Year Rule:
VA guidelines generally focus on credit issues within the past year. If the bad credit event occurred more than a year ago, it’s often not a barrier to approval.
Lender Selection Matters:
Many lenders impose additional rules (lender overlays) on top of VA requirements. Working with a broker who has access to low or no-overlay lenders can significantly increase your chances of approval.
Take the 30 second mortgage quiz to see if you qualify
If your credit issues occurred over a year ago and have since been resolved, VA guidelines generally consider you in good standing. Minimal documentation may be required, especially with a no-overlay lender.
For recent credit issues, VA loans may still be possible if the problem can be tied to an extenuating circumstance. Unfortunately, VA guidelines specifically exclude divorce itself as a valid reason. However, there are exceptions:
Take the 30 second mortgage quiz to see if you qualify
Joint debt that your ex-spouse was assigned responsibility for in the divorce can be tricky. If their failure to pay is documented in the divorce decree, you may still qualify for a VA loan by excluding that debt.
Navigating VA loan rules after a divorce is highly specialized. Many lenders, especially large online ones, may not have the expertise to handle complex cases like these. Working with a knowledgeable mortgage broker can make all the difference.
If you or someone you know is dealing with bad credit due to divorce, don’t hesitate to reach out. I’m licensed in most states and have extensive experience with VA loans and credit challenges.
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I can originate VA mortgage loans anywhere that I’m licensed.
I’m licensed in Alabama, Arkansas, Arizona, California, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin.
Additionally, our team can originate mortgages in several additional states through our corporate referral program.
If you’ve been denied for a VA home loan by major lenders like Veterans United or Rocket Mortgage, don’t lose hope. You still have a strong chance of getting approved. The reason? Many big online lenders enforce additional rules known as lender overlays, which go beyond what the VA itself requires.
Manual underwriting is a process that involves a human underwriter reviewing an applicant’s financial information instead of an automated system. This process can be used for VA loans when the VA’s algorithm doesn’t approve an applicant, or when an applicant has certain negative items in their credit history.
Are you worried about your credit history affecting your chances of getting a VA home loan? In this video, we break down the VA’s rules regarding credit occurrences and explain how you can potentially overcome credit challenges.
Take the 30 second mortgage quiz to see if you qualify
