Behind on a VA Home Loan: What Are My Options?

If you are behind on a VA home loan and want to keep the house, your servicer must review you under VA’s Loss Mitigation Waterfall: special forbearance, a repayment plan, three kinds of loan modification and, once you are at least three full months behind, the new VA Partial Claim. If keeping the house no longer works, VA’s exits are a short sale and a deed in lieu of foreclosure, and either can come with $1,500 to help you move. VA also offers free help from its loan technicians.

This page covers VA loans only. For an FHA loan, read FHA loss mitigation options instead.

Two calls that cost nothing

Call your servicer and, for a second voice, VA’s loan technicians at 877-827-3702 (select 6), weekdays 8:00 a.m. to 6:00 p.m. Eastern. VA says it automatically assigns a technician once a VA-backed loan is 61 days past due, and you can call before that. A free HUD-approved housing counselor can join you, and our guide to foreclosure rescue scams lists the red flags VA also warns about.

The keep-the-house options, in VA’s order

When you tell the servicer you can resume payments and want to stay, it must walk the Waterfall in Chapter 5 of the VA Servicer Handbook (M26-4), starting at step one each time:

1. Special forbearance. Payments are suspended or reduced for a set period, offered when you can repay the missed amount in a lump sum within 90 days or will move into a repayment plan.
2. Repayment plan. Your regular payment plus part of the arrears each month, typically up to six months; VA encourages 12- or 18-month plans in some cases.
3. Traditional VA modification. Arrears are added to the balance, offered only if principal and interest stay the same or drop.
4. 30-year modification. A new 30-year term, again only at the same or a lower payment.
5. VA Partial Claim. Explained below.
6. 40-year modification. The term stretches to 40 years; the final step, if you can afford the terms.

If you are less than three full months behind, only the first four are available. Each modification and the partial claim start with a trial payment plan, generally three months, and the handbook says a servicer that offers one must stop initiating, continuing or completing a foreclosure. VA’s regulation (38 CFR 36.4315) sets conditions for modifications made without VA’s prior approval, including 12 payments since closing, and states that it creates no right to a modification.

The VA Partial Claim

VA pays the servicer what it takes to bring you current, and you owe that amount back to VA with no interest and no monthly payments until the loan is paid off, matures or ends. Congress created it in the VA Home Loan Program Reform Act (Public Law 119-31, July 30, 2025), now 38 U.S.C. 3737. The program is open, and VA gave servicers until November 28, 2026 to build it into their systems.

The limits come from Chapter 22 of the handbook:

• The arrears cannot exceed 25 percent of your unpaid principal balance, or 30 percent if you missed a payment between March 1, 2020 and May 1, 2025.
• At least three full months behind, 12 payments made since closing, no modification in the past 24 months, primary residence, no active bankruptcy.
• One per loan (with a disaster exception), and none after a COVID-era VA partial claim.

The attestation you sign says you become personally liable, that an unpaid balance can be collected through garnishment of federal benefits and tax refunds, and that it may prevent a future streamline refinance (IRRRL). A HUD-approved counselor can read it with you first.

VASP is closed

VA’s Servicing Purchase program (VASP) no longer exists. Under Circular 26-25-2, VA stopped accepting VASP submissions on May 1, 2025 and issued no VASP payments after September 30, 2025. Treat any VASP pitch as a warning sign.

When keeping the house stops making sense

VA’s version of a short sale, sometimes called a compromise sale, sells the house for less than you owe while the servicer releases the lien in exchange for the proceeds. Under 38 CFR 36.4322(e), the servicer can approve it without VA when the loan cannot be saved, the net proceeds, plus any amount the servicer waives, at least equal the property’s net value under VA’s rules, and you receive no sale proceeds. If you are 60 or more days behind and ask for one, the handbook says the servicer need not review your income and expenses. A loan with a VA partial claim needs VA’s advance approval.

A deed in lieu hands the house to the servicer instead. Under 36.4322(f), a servicer accepting one on its own authority must first consider a short sale and find it impractical, and the title must be clear. Compare them on deed in lieu vs short sale.

Either way, VA authorizes the servicer to advance $1,500 in relocation assistance if you live in the home and sign the servicer’s written agreement (M26-4, section 5.10). Our relocation assistance page compares other loan types.

What happens to your VA benefit

A short sale, deed in lieu or foreclosure can reduce your future VA home loan benefit until VA’s loss is repaid (VA calls this restoration of entitlement). Credit waiting periods are on short sale credit and buying again.

Where we fit

Short Sale Guide is a licensed Florida real estate brokerage that connects homeowners with agents who handle VA short sales. Which option fits is a question for your servicer, a VA loan technician, a HUD-approved counselor and, for legal questions, a Florida attorney. If a sale is on the table, the free file checker lists the documents your loan program asks for. You can also call 855-725-3898.

This page is general information for Florida homeowners and is not legal or tax advice.