How the VA Partial Claim Program Works for Missed Mortgage Payments

James M. Walker | All American Realty Group | Retired Fayetteville Police | 35 Years Local | 200+ Homes Sold

What Is the VA Partial Claim Program?

If you have a VA loan and you have fallen behind on payments, the VA Partial Claim Program can help you catch up without losing your home. Here is how it works in plain terms: the VA and your mortgage servicer may cover the amount needed to bring your loan current. That amount becomes a separate partial claim balance attached to your property, and you repay it later instead of all at once.

Two things to know up front. First, you cannot request a partial claim directly. It is offered through the VA loss mitigation process, which means your servicer reviews your situation and decides which option fits, not you picking it off a menu. Second, before a partial claim gets approved, the VA requires you to complete a three month trial payment plan, making your regular mortgage payment on time for three straight months to show you can afford the loan once it is current.

This is not loan forgiveness. It is a way to move your missed payments out of your main mortgage and into a separate, no-interest subordinate balance so your first mortgage goes back to being current. You pay that balance back when you sell the home, refinance, or pay off your mortgage, whichever happens first.

How the Partial Claim Program Works

Once you finish the three month trial payment plan, your servicer submits the claim to the VA for review. If approved, your servicer advances the amount needed to bring your mortgage current, and the VA reimburses the servicer. The reinstatement amount generally cannot exceed 25 percent of your unpaid principal balance. If your missed payments happened between March 2020 and May 2025, that cap can go up to 30 percent. For example, on a loan with a $200,000 unpaid balance, the 25 percent cap works out to a maximum of $50,000. That is a ceiling, not a guarantee. The actual amount is based on what it takes to bring your specific loan current.

The advance can cover more than just skipped principal and interest. It may also include past due property taxes, insurance premiums, and other amounts that are part of your regular monthly payment. HOA dues are generally not included unless they are collected as part of your monthly mortgage payment. This can matter when the amount needed to bring the loan current includes housing expenses beyond principal and interest.

What Happens to the Money

The VA takes a subordinate lien position on your home in exchange for the advance, meaning it sits behind your first mortgage. Your regular mortgage goes back to current. That subordinate balance carries no interest and no monthly payment. You owe nothing on it until one of these happens:

You sell the home
You refinance the mortgage
You pay off the loan in full
The mortgage is assumed by someone else

One thing worth planning around: the partial claim balance comes out of your proceeds when you sell. If you owe $20,000 on the partial claim at closing, that amount gets paid out of your equity before you see a dime, so it is worth knowing that number if a move is anywhere on your horizon.

Who Qualifies for a VA Partial Claim

You generally need to meet a few conditions:

Your loan is VA guaranteed and the home is generally your primary residence
Your mortgage is at least three full monthly payments past due
You have made at least 12 monthly payments since the loan began (or at least six since your most recent loan modification, if it was previously modified)
You are not in active bankruptcy
Everyone on the mortgage note is willing and able to sign the required documents
You have not already received a partial claim on this same loan
You can complete a three month trial payment plan showing you can afford the loan going forward

Servicers have until November 28, 2026, to add partial claims to their systems, so if you are not sure your servicer offers it yet, ask directly: "Has your company implemented the VA Partial Claim Program, and can you evaluate my loan for a trial payment plan?" Get the answer in writing if you can, and keep notes on who you spoke with and when.

The program is generally a one time use benefit per loan. There is an exception for hardships tied to a Presidential disaster declaration, which may allow a second claim in certain cases.

Does a VA Partial Claim Hurt Your Credit?

This is the question most people ask first. The missed payments that led up to the partial claim may already have affected your credit, since servicers commonly report late payments to the credit bureaus. Bringing your mortgage current through a partial claim does not erase those previously reported late payments. What it does is stop the default from getting worse, since your loan goes back to a current, on-time status going forward.

Credit reporting details can vary by servicer. Ask yours directly how your account and the partial claim balance will be reported once the loan is brought current.

What to Do If You Are Behind on Your VA Loan

Call your loan servicer first. They are the ones who submit the partial claim to the VA, not you directly. Ask them plainly whether you qualify for a trial payment plan and a partial claim, and get the answer in writing if you can.

If you want a second set of eyes on your options, whether that means understanding your home's value or figuring out if selling is the better move, reach out. With 200+ homes sold, we have experience helping military families, veterans, first responders, and relocating homeowners work through situations like this, wherever you are stationed or living.

Frequently Asked Questions

Will a VA partial claim hurt my credit?

A partial claim does not erase late payments that were already reported. What it does is stop the default from continuing to get worse, since your loan returns to current status. Ask your servicer how the completed partial claim will show up on your credit report, since reporting details can vary.

How many times can I use a VA partial claim?

Generally once per loan. There is an exception for hardships connected to a Presidential disaster declaration, which may allow a second claim in certain circumstances.

Do I have to pay the partial claim back right away?

No. There is no monthly payment and no interest on the partial claim amount. You repay it when you sell the home, refinance, pay off the mortgage, or the loan is assumed, whichever happens first.

How much money can the VA advance through a partial claim?

Your servicer advances the amount needed to bring your mortgage current, and the VA reimburses the servicer, up to 25 percent of your unpaid principal balance at the time of the claim. That cap rises to 30 percent if your missed payments occurred between March 2020 and May 2025.

Who do I contact to start a VA partial claim?

Your mortgage servicer, not the VA directly. Your servicer manages the trial payment plan and submits the claim to the VA for approval.

About the Author: James M. Walker

James Walker has lived in Fayetteville and the surrounding areas for more than 35 years. After serving 20 years as a Fayetteville police officer and spending the past 6 years in real estate, he brings deep local knowledge and practical experience to every transaction. He specializes in helping military families, veterans, first responders, and relocating buyers navigate the process with clarity and confidence. Working alongside his wife, Stephanie, James focuses on education, strong communication, and helping clients make informed decisions when buying or selling in North Carolina.

About All American Realty Group

All American Realty Group helps buyers and sellers across Fayetteville, Raeford, Hope Mills, Spring Lake, and surrounding North Carolina communities. We specialize in helping military families, first-time buyers, and relocating homeowners understand financing options, down payment assistance programs, and local market conditions.

With deep knowledge of Cumberland County and the Fort Bragg area, our team focuses on clear communication, strategic planning, and making the buying or selling process simple.

If you are considering purchasing or selling a home anywhere in North Carolina, we can help you understand your options and build a plan that fits your budget.

Schedule a buyer or seller consultation here: https://calendly.com/jamesmwalker181/buyer-or-seller-meeting