VA Loan After Foreclosure, Deed in Lieu, or Short Sale
I'm Carlos Scarpero, a mortgage loan originator with Edge Home Finance, LLC. My NMLS is #1674385, the company's is #891464, and I'm licensed in 34 states. I work VA files with a prior foreclosure, deed in lieu, or short sale in them. A foreclosure does not end your VA benefit. There is a waiting period, there are documentation requirements, and if the foreclosed loan was itself a VA loan there is a separate entitlement question. Let me separate those three things for you, because they get mixed together and that is what makes veterans think they are locked out for seven years. If you lost a home, gave one back, or sold short, whether the old loan was VA, FHA, or conventional, keep reading.
Longer version: VA home loans after foreclosure, here is how to get approved.
The waiting period
VA HANDBOOK EXCERPT
“You may disregard a foreclosure finalized more than 2 years from the date of closing.”
Two years from the date the foreclosure was finalized to your closing date. Inside one to two years it is still possible if you have taken on new credit since and paid it well, and the foreclosure was caused by circumstances beyond your control that can be verified. Conventional and FHA waiting periods are longer, which is where the seven-year number veterans hear comes from.
Source:
VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 4: Credit Underwriting, Topic 7
When the foreclosure happened alongside a bankruptcy, the handbook uses the later of the bankruptcy discharge or the transfer of title to start the clock. Title transfer dates are often much later than people remember, so pull the deed record before you count months. If a bankruptcy is also in the file, read VA loans after bankruptcy next.
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Deed in lieu and short sale can be treated differently
VA HANDBOOK EXCERPT
“If the borrower’s payment history on the property was not affected before the short sale or deed in lieu and was voluntarily communicating with the servicer or holder, then a waiting period from the date transfer of the property may not be necessary.”
This is the most useful sentence in the chapter for anyone who handled a bad situation the right way. If you stayed current up to the short sale or deed in lieu and worked with the servicer instead of walking away, the handbook allows for no waiting period at all. It has to be documented: the payment history before the transfer, and the correspondence showing you were the one communicating.
Source:
VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 4: Credit Underwriting, Topic 7
If the lost home had a VA loan, entitlement is a separate question
Two separate tests have to pass. The credit test is the waiting period above. The entitlement test is whether VA paid a claim on your old loan, because that portion of your entitlement stays used until the loss is repaid or the entitlement is restored. Your certificate of eligibility shows the remaining amount, and a partial entitlement file still works, it just brings county loan limits back into the math and may require a down payment.
A prior VA loss also puts you in the federal claims database (CAIVRS). The handbook is explicit that a CAIVRS finding on another agency’s loan does not prevent a VA loan when the VA credit standards are met, which surprises loan officers who mostly write FHA. Most of these files are manually underwritten.
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VA loans after foreclosure by state
Foreclosure timelines are state law, and whether your state is judicial or non-judicial changes when the clock actually started. Pick your state:
- Alabama
- Arizona
- Arkansas
- California
- Colorado
- Florida
- Georgia
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- New Mexico
- North Carolina
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- Tennessee
- Texas
- Utah
- Virginia
- Washington
- West Virginia
- Wisconsin
Questions veterans ask about this
How long after a foreclosure can I use a VA loan?
Two years from the date the foreclosure was finalized to your closing date under the handbook, and possibly sooner between one and two years with new credit paid on time and a verified cause beyond your control.
I short sold and never missed a payment. Do I still have to wait?
Maybe not. The handbook allows for no waiting period when your payment history was not affected before the short sale or deed in lieu and you were the one communicating with the servicer. Expect to document both.
Can I use a VA loan again if VA paid a claim on my last one?
Often yes, with reduced entitlement rather than full entitlement. The used portion stays tied up until the loss is repaid or entitlement is restored, so the file is planned around the remaining amount and the county loan limit.
Does a CAIVRS hit stop a VA loan?
Not on its own. The handbook allows a lender to keep processing a VA loan when the VA credit standards are met and it is documented in the file, even while another agency has not cleared its finding.
Last reviewed September 2026
Related reading
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