As a loan officer, I frequently encounter questions about whether it’s possible to secure a VA loan with a repossession on your credit report. The good news is that, yes, you can get a VA loan even if you’ve had a repossession, but the specifics can vary depending on various factors.
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When it comes to repossessions, the VA’s guidance is somewhat vague. However, most lenders have established a general waiting period of one year from the event of repossession. This timeframe can differ based on how lenders interpret the starting point for that waiting period. Some lenders will begin the count from the repossession date, while others may start from the date of your last late payment.
If your repossession was related to a financial hardship, extenuating circumstances can also reduce or eliminate this waiting period. Extenuating circumstances such as job loss or medical issues, when fully resolved, can be persuasive arguments that may allow for quicker approval timelines.
It’s essential to differentiate repossessions from foreclosures. The VA has clearer guidelines on foreclosures, typically requiring a two-year waiting period from the date the title transferred from your name to the lender’s name. However, similar to repossessions, this period can be shortened to one year if you can prove extenuating circumstances, such as a major job loss or medical crisis that has since been resolved.
Certain factors can qualify as extenuating circumstances that may help reduce your waiting period:
Be aware that not all life events will qualify to shorten your waiting period. For example, divorce or the condition of the car or item that was repossessed is typically not considered.
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In conclusion, securing a VA loan with a repossession on your credit is possible, but the outcome heavily depends on the specifics of your circumstance and the lender’s guidelines. Understanding these nuances and ensuring that any extenuating circumstances are well documented will significantly improve your chances of obtaining a loan.
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