A derogatory credit event does not end your VA benefit. Two separate questions decide when you can buy again: the credit waiting period, and whether the entitlement tied to the old loan has been restored.
No-obligation VA pre-qualification review.
A foreclosure on a non-VA loan leaves your VA entitlement intact and becomes a credit-seasoning question. A foreclosure on a VA loan usually ties up entitlement until the VA's loss is repaid, though remaining entitlement can still support a purchase with a down payment.
Two years of re-established credit is the usual benchmark, and remaining entitlement often lets you buy again before the old loss is repaid.
Reviewed by the licensed mortgage team at Simply Approved Mortgages · Last verified August 25, 2026 against the VA Lenders Handbook (M26-7)
Check my entitlement| Event | Typical benchmark | What underwriting looks at |
|---|---|---|
| Chapter 7 bankruptcy | 2 years from discharge | VA looks for re-established credit and no derogatory activity since discharge. Between 1 and 2 years is possible when the bankruptcy was clearly caused by circumstances beyond your control and you've since shown the ability to manage your finances. |
| Chapter 13 bankruptcy | 12 months of on-time plan payments | You can qualify while still in the plan once you've made 12 satisfactory payments and the trustee or bankruptcy judge approves the new obligation in writing. |
| Foreclosure (non-VA loan) | 2 years | Two years of re-established credit is the standard benchmark. The foreclosure of a non-VA loan doesn't touch your VA entitlement. |
| Foreclosure on a VA loan | 2 years, plus entitlement restoration | Two things must be solved: the credit waiting period, and the entitlement that stays charged to the foreclosed loan. Unless VA's loss is repaid, that portion of entitlement is not restored — so you may buy again on partial entitlement. |
| Short sale or deed-in-lieu | 2 years typically | Treated similarly to a foreclosure. If the short sale was on a VA loan and VA paid a claim, the entitlement charged remains until the loss is repaid. |
| Loan modification | No set waiting period | A modification is not a derogatory housing event by itself. Underwriting looks at payment history after the modification took effect. |
These are VA program benchmarks. Individual companies in the VA market apply their own overlays on top of them, and those overlays vary — which is why the same file can be declined in one place and approved in another. See credit score by program.
Credit recovery and entitlement recovery are two separate problems. Clearing the waiting period does nothing for entitlement that is still charged to a prior VA loan — and vice versa.
When VA pays a guaranty claim after a foreclosure, short sale or deed-in-lieu, that entitlement stays charged to you until the claim amount is repaid. Repay it and the entitlement is restored — you return to full entitlement with no VA loan limit.
The ordinary path: the prior VA loan is paid off and the property is disposed of. Request restoration with VA Form 26-1880 so your next Certificate of Eligibility shows the entitlement back in place.
If a prior VA loan has been paid in full but you kept the property, VA allows a one-time restoration of that entitlement. It can only be used once, so it is worth confirming whether your situation genuinely needs it.
If an eligible veteran assumes your VA loan and substitutes their own entitlement for yours, your entitlement is released. Without substitution, your entitlement stays tied to that property until the loan is paid off.
You do not have to wait for restoration. Remaining entitlement is measured against your county's 2026 conforming loan limit, which can mean a down payment covering the gap on a larger purchase — but it keeps you moving now.
Restoration is requested on VA Form 26-1880, the same form used for a Certificate of Eligibility. Start the COE walkthrough or check your county limit if you plan to buy on remaining entitlement.
A prior foreclosure, short sale or bankruptcy does not change the VA funding fee. The fee is set by your down payment and whether this is a first or subsequent use of the benefit — published by VA and financeable into the loan.
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% down | 2.15% | 3.30% |
| 5% to 9.99% down | 1.50% | 1.50% |
| 10% or more down | 1.25% | 1.25% |
Same fee on a first or subsequent use.
Charged on the new loan amount.
VA is the direct lender on federal trust land.
Exemption status is printed on your Certificate of Eligibility. Price your own fee with the funding fee calculator. There is never monthly mortgage insurance on a VA loan, whatever your credit history looks like.
Tell us the dates and we'll tell you honestly where you stand — no credit pull to start.
SAM is the Simply Approved Mortgages AI assistant, grounded in the VA Lenders Handbook M26-7, 38 CFR Part 36 and the county loan-limit file behind this page. It answers general VA questions. A licensed mortgage loan originator reviews every scenario before any terms are confirmed.
Hi — I'm SAM with Simply Approved Mortgages. Ask a question about VA loans after foreclosure, or pick one of the popular questions beside this box.
AI assistant — general VA loan education only, not financial, legal or tax advice, not a loan approval, pre-approval or commitment to lend. Simply Approved Mortgages LLC (NMLS #2620881) is an independent mortgage broker and is not the VA, HUD or any government agency, and is not endorsed by them. All loans are subject to lender underwriting, appraisal and final approval. Equal Housing Opportunity.
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A VA loan can finance up to a 4-unit property with $0 down, as long as you live in one unit. Rent from the other units can even help you qualify.
Program rules and figures on this page are taken from the primary government sources below, not from third-party summaries.
Verified against VA Lenders Handbook M26-7, Change 6 — August 12, 2026. Simply Approved Mortgages is not affiliated with or endorsed by HUD, VA, or any government agency.
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