On June 15, 2026, the US Department of Veterans Affairs (VA) officially launched a new program called the VA Partial Claim Program to help military homeowners avoid foreclosure. This program was created under the VA Home Loan Program Reform Act, which was signed into law on July 30, 2025. It is designed as a foreclosure-prevention tool for VA-backed home loans only. Under this program, the VA can pay the missed mortgage amount on behalf of the homeowner to bring the loan current.
Who can apply for VA partial claim
The home must be the borrower’s primary residence to qualify for the program. Investment properties and second homes are not eligible under this rule, as noted by Military.com. The borrower must be either already in default or at risk of missing mortgage payments soon. If the regular payment is still too high for current income, the partial claim alone may not solve the issue. A key requirement is a three-month trial payment plan before final approval.
Trial payment rules and loan limits
During the trial period, the borrower must make three consecutive on-time full mortgage payments. The VA generally allows only one partial claim per loan, with limited exceptions for major disasters. The program can cover up to 25% of the unpaid principal loan balance at the time of assistance. If a borrower had COVID-era hardship relief between March 1, 2020, and May 1, 2025, the limit increases to 30%, as cited by Military.com.
The partial claim amount can also include missed property taxes, homeowners insurance, and HOA dues if unpaid. In such cases, the VA and lender may combine a partial claim with a loan modification. A VA partial claim does not change the interest rate, monthly payment, or loan term.
Partial claim vs loan modification
A loan modification, in contrast, changes the loan terms such as rate, term length, or balance. To apply, borrowers must first contact their mortgage loan servicer’s loss mitigation department. The servicer will then ask for documents explaining the financial hardship. Required documents usually include a hardship letter, income proof, and bank statements, as noted by Military.com.
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Approval, repayment rules and denial reasons
The servicer reviews all available foreclosure-prevention options before approving a partial claim. If eligible, the borrower is placed into the three-month trial payment plan stage. After successful completion of the trial, the servicer submits the case to the VA for approval. If the VA approves it, the funds are used to bring the mortgage current. The unpaid amount is then recorded as a subordinate lien on the property. The borrower receives official documents explaining the lien amount and repayment conditions.
After approval, the borrower resumes normal monthly mortgage payments as before. The main mortgage is considered fully current after the partial claim is applied. The subordinate lien does not require monthly payments and does not accrue interest. The lien must be repaid in full when the home is sold, refinanced, or the mortgage is fully paid off. During refinancing, the lien must usually be cleared at closing or paid using home equity.
Home value impact and reasons for denial
If the home value increases, this repayment is usually easier to manage. If home value drops, repayment can become more challenging and may need lender advice. VA entitlement is not affected if the loan stays current after the partial claim. However, future defaults after receiving a partial claim can reduce VA entitlement.
One common reason for denial is that the borrower’s hardship is permanent instead of temporary. Another reason is failure to make on-time payments during the trial period. Denial can also happen if the total debt exceeds the 25% or 30% coverage cap, as per the report by Military.com. If the home is no longer the borrower’s primary residence, the program will not apply. Missing or incorrect documentation can also delay or block approval. If a borrower already used a partial claim earlier, they usually cannot use it again unless it is disaster-related.
Overall, the program is built to help veterans recover from temporary financial setbacks while keeping their original mortgage terms stable.
