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Information on Modifying a VA Loan

The VA offers Veterans who have used the VA Home Loan Guarantee Program and subsequently fallen on hard times, the opportunity to have loan modifications.

Published on January 7, 2021

Homeowners having a hard time making their mortgage payments should know there are options available before foreclosure.

Depending on your specific circumstances, you may be eligible for VA loan modification.

What Is VA Loan Modification?

VA loan modification is the process of changing the terms on your mortgage so it becomes more affordable. Unlike refinancing, loan modification involves changing the terms on your current loan instead of replacing it with a new mortgage.

Modification can help borrowers falling behind; however, it can also affect your credit score and the interest rate of the loan.

How To Modify Your VA Loan

Your first step is to contact your loan servicer immediately to review home retention options.

The VA encourages servicers to examine all retention options possible, including a repayment plan, special forbearance, and loan modification. However, the VA also states that home retention options should not be approved unless it's within the borrower's financial ability.

Who Can Have Their VA Loan Modified

The loan modification process varies by servicer, but expect questions to verify:

  • Your VA loan is in default.
  • You've since recovered from the temporary hardship that caused the default.
  • You can support all financial obligations with a modified VA loan.
  • You made 12 monthly payments since the closing date.
  • You've not modified your VA loan in the past three years.

Your lender or servicer will want to ensure modifying the loan will help your financial situation and not drive you deeper into debt.

Lenders should not modify loans for Veterans when the Veteran will still not be able to afford the new terms.

Veterans should keep in mind that foreclosure is not the end of the world. Yes, many people will do anything to keep their home, but sometimes it is more costly for you and your family to try and hold on to a home you can no longer afford.

If you are having trouble making mortgage payments, contact your servicer or your regional VA loan service center for help as soon as possible.

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