Bankruptcy Guidelines

• VA loan guidelines allow a veteran and a nonpurchasing spouse to qualify for a mortgage if they are making payments on a Chapter 13 bankruptcy, or if they filed a chapter 7 bankruptcy that has been discharged for at least 24 months. Lenders require letters of explanation for the bankruptcy, and one of the previously discharged items cannot be a prior VA loan.
  
  

State Differences

• In community property states, the nonborrowing spouse's debts and obligations will be factored into the mortgage approval process. If the spouse had a bankruptcy in a prior marriage, preceding the marriage to the veteran, the bankruptcy will not be counted against him in the mortgage approval process. In noncommunity property states, debts or obligations of a nonborrowing spouse aren't counted against the veteran in the loan.
  
  

Considerations

• To qualify for a VA-backed loan, the applicant veteran must have satisfactory credit and meet all of the lender guidelines for mortgage approval. If the veteran has a history of late payments, she will not meet the guidelines for loan approval, regardless of the disposition of the nonpurchasing spouse's bankruptcy filing.