Behind on Your VA Mortgage? How the New Partial Claim Program Works

For about 13 months, veterans in serious mortgage trouble (that is to say, in danger of losing their homes) had fewer options than they should have. And by “should have,” we mean there was a program in place to help delinquent veteran homeowners. But it ended, and there was no replacement for it in play.

For three months they had no options at all.  

The VA wound down the Veterans Affairs Servicing Purchase program (called VASP) in May 2025. As a result, by April 2026, more than 10,000 veterans had lost homes because they had nowhere to turn.

But Congress actually did something about it, passing the VA Home Loan Program Reform Act, which was signed into law three months after VASP ended. This new law authorized the new partial claim, opening the program to servicer submissions on June 15, 2026. It didn’t come in time to save 10,000 veterans from losing their homes, but at least the government did something.

What’s a Partial Claim, Anyway?

A partial claim is a cash advance paid by a mortgage servicer, then reimbursed by the VA that covers any overdue payments needed to bring your loan current. In exchange, the VA takes a subordinate lien (basically another mortgage) on your property for exactly that amount.

The VA’s lien sits behind your primary mortgage, carries zero interest, and requires no monthly payments. You repay it when you sell the home, refinance, or just pay it off. You still owe the money, but the debt stops growing, you stop falling into a pit of despair, and probably get more sleep.

These advances are capped at 25% of the unpaid principal balance. Borrowers who missed payments between March 1, 2020 and May 1, 2025 (basically the COVID-era) get a slightly higher cap of 30% of unpaid principal balance, reflecting the larger arrears (overdue debt) some of those borrowers accumulated.

The amount advanced covers missed principal and interest payments plus, where applicable, past-due property taxes and homeowners insurance premiums. 

Probably the most important distinction from VASP is that the old program took the loan, restructured it, and reconfigured the underlying monthly payment. A partial claim won’t change your loan terms at all, it only brings you up to date on your payments. Your original monthly payment remains exactly what it was.

So if you fell behind because of a temporary income disruption (like a deployment, a job loss, or injury) and your finances have recovered, the partial claim likely fits your situation well. If the payment itself was always the problem, you may need a loan modification instead. 

The Three-Month Trial Payment Plan

This is the federal government we’re talking about, so there’s a catch. There’s always a catch. Because the elderly millionaires in Congress are so in touch with the average American: You don't just get the partial claim because you applied. You kinda have to earn it, because putting your life on the line to invade Iraq or Afghanistan (or maybe even Iran by the time this gets published) wasn’t enough.

Before the VA reaches for its wallet, your servicer puts you on a three-month trial payment plan, or a TPP—the most unnecssary of three-letter acronyms (TLAs). Those three months are the proof of concept: you pay on time, you demonstrate you can handle the mortgage going forward, and then the servicer moves to bring the loan current.

This structure protects both sides so veterans don't get burdened with a reinstated mortgage they still can't afford, and the VA doesn't advance funds on loans likely to just default again. 

But if you fail the trial payment plan, the loan servicer doesn't just pick up your old situation where it left off. VA rules require that the loan re-enter what’s called the Loss Mitigation Waterfall (no joke, you’re going over a waterfall) at Step 1, which means a complete re-evaluation of all available options.

There's only one exception to being pushed over the Waterfall: borrowers who completed a Special Forbearance can get a repayment plan at the conclusion of their forbearance period without cycling back through every prior step.

Chasing Waterfalls

The Loss Mitigation Waterfall is an ordered sequence of options a loan servicer must evaluate before it can foreclose (take your house). The partial claim is actually Step 5 in that sequence, one step ahead of the 40-year loan modification option at Step 6.

The Steps, in order, are: Special Forbearance, Repayment Plan, VA Traditional Loan Modification, 30-Year Modification, VA Partial Claim, and 40-Year Modification. 

Despite the foreshadowing in its name, the waterfall structure exists to help you. If your servicer denies a partial claim, it doesn't mean you don't qualify. It might only mean the servicer hasn't developed its system yet or hasn't fully evaluated you under earlier steps.

All servicers have until Nov. 28, 2026 to implement a complete waterfall system. 

Eligibility Requirements

The program is available for primary residences on VA-guaranteed loans that are in default or at imminent risk of default. The delinquency amount must fall within the aforementioned cap when a servicer reviews the loan under the Waterfall system. And borrowers cannot "buy down" their arrearage to make the numbers work—meaning you can’t find some quick money to catch up on payments to meet the cap.

So if you're $90,000 behind on a $200,000 balance and the cap is 25% ($50,000), you're over the limit, and winning $40,000 in Vegas to cover the gap then throwing it at the servicer won't change your eligibility. The loan would go back to Step 1 of the Waterfall for a fresh evaluation. 

Borrowers who already used a partial claim under any COVID-era program (including the standalone COVID-19 Veterans Assistance Partial Claim Payment (VAPCP), or COVID-19 Refund Modification are not eligible for the new program on the same loan. That prior claim is considered a paid partial claim and disqualifies the borrower from the new program. 

How the Math Maths

Say you're $14,000 behind on a VA loan with a remaining balance of $310,000. The standard 25% cap would allow an advance of up to $77,500, well above what you need. Your servicer puts you on a three-month trial plan. You make three payments on time. The servicer advances $14,000 to bring the loan current and gets reimbursed by the VA. The VA places a $14,000 subordinate lien on your home. Nothing is due monthly on that lien. 

Three years later, you sell the home. 

After the first mortgage is satisfied from the proceeds, the $14,000 VA lien gets paid from what's left. You kept the home without losing the equity.

Refinancing is different. A VA streamline refinance (also known as the Interest Rate Reduction Refinance Loan) requires subordinate liens to be addressed. Borrowers must repay the VA (through the servicer) when the loan is paid in full, refinanced, or sold, which affects your closing costs and net equity calculations. You’re still keeping the home, you just have to pay off the VA when you refi, not when you sell…

… If you can even get a streamline refinance. Taking a partial claim may prevent a borrower (dependent on which state they’re in) from getting an IRRRL later. Some lenders also exclude loans with a prior partial claim outright.

Not Yet Ready for Primetime

The program technically launched on June 15, 2026, but "launched" doesn't mean "immediately available." As noted earlier, the VA gave servicers until Nov. 28, 2026 to fully implement a program. Some major servicers moved on it early. Others did not. 

But even if a partial claim isn't available from your servicer yet, the rest of the Loss Mitigation Waterfall is. So press on with every other option while waiting for your servicer to offer it.

If You're Behind Right Now

Call your loan servicer's loss mitigation department and ask for an evaluation under the VA's Loss Mitigation Waterfall. Find out where you are in the waterfall, what options are available to you today, whether the partial claim is live at their shop, and when they expect it to be if it isn't. 

If a foreclosure clock is ticking while you wait, VA loan technicians can intervene directly with your servicer on your behalf. This service is available to veterans with VA-guaranteed loans, and also to veterans with non-VA loans who need housing help. 

If you believe you were wrongly denied a loss mitigation option, you can also submit a complaint through VA's Loan Guaranty support portal. The VA's Veterans Benefits Banking Program connects veterans with credit and financial counselors at no cost.

Partial Claims at Work

Despite Congress’ failure to have a replacement in place for VASP, the VA still helped 173,000 veterans avoid foreclosure in 2025 through its other loss mitigation options. The partial claim is a great weapon to add to that arsenal, but there are some caveats.

The five-year authorization for partial claims only runs through 2030 and borrowers who default on loans where the VA has made a partial claim advance are still personally liable for any resulting loss. 

The VA can (and will) recover that loss the same way it collects any other debt owed to the United States—not by breaking your legs, but you might prefer that route in the end. The VA also won't restore the borrower's home loan entitlement until the loss is repaid in full. 

Listen: bad news does not age like wine. If you're behind on a VA mortgage right now, the worst move is to wait. After three months and three on-time payments, you could be made whole again with a partial claim, instead of having a foreclosure on your record. 

I’d make that deal. Damn good deal.