Is the VA Home Loan Program Closed? What Ended in 2025, What Replaced It, and the November 28 Deadline

The VA home loan program is not closed. VA still guarantees purchase and refinance loans with no down payment; its June 15, 2026 release counts "more than 500,000 new home loans guaranteed in fiscal year 2025." What ended was a single tool for borrowers already behind on payments: the Veterans Affairs Servicing Purchase program, or VASP. VA Circular 26-25-2, dated April 23, 2025, stopped new VASP submissions "As of May 1, 2025." Congress then created a replacement, the Partial Claim Program, in the VA Home Loan Program Reform Act, signed July 30, 2025. VA opened it on June 15, 2026. What is not settled is whether your servicer offers it yet: VA gave servicers "until November 28, 2026, to add partial claims to their systems."

What VASP was, and how it ended

VA launched VASP on May 31, 2024 as the last step in its "Home Retention Waterfall." When nothing else worked, VA bought the delinquent loan from the servicer and the veteran got, in VA's April 2024 words, "a fixed 2.5% interest rate." That rate held no matter what market rates had done since the loan closed.

Circular 26-25-2 wound it down in three dates. Servicers had to stop using the waterfall by April 30, 2025 at 11:59 p.m. EDT. VA took no new VASP submissions from May 1, 2025. Trial payment plans already accepted could run to August 31, 2025, and "No VASP payments will be issued after September 30, 2025." The same circular removed the rule that a 30-year or 40-year modification had to cut the principal and interest payment by at least 10 percent.

That left a gap of more than a year. A borrower who fell behind between May 2025 and June 2026 could get a repayment plan, forbearance or a loan modification, but a modification at a current rate can raise the payment. VA's own foreclosure page warns: "Due to rising interest rates, your new monthly payment could be higher."

What the Partial Claim Program does

Section 3737 lets VA buy "a portion of indebtedness" on a VA-guaranteed loan for a primary residence that is in default or at imminent risk of it. The servicer must apply the money "first to arrearages," which can include taxes, insurance and homeowner's dues. VA takes a lien behind the first mortgage. The first loan is not rewritten, so its rate and term stay where they were.

• Cap: 25 percent of the unpaid principal balance, or 30 percent if you missed a payment between March 1, 2020 and May 1, 2025.
• How often: one partial claim per loan, plus another if you missed a payment during a presidentially declared major disaster or the 120 days after it.
• Trial first: VA requires a three-month trial payment plan before the servicer brings the loan current.
• Repayment: VA's page says you pay it back "when you pay off your loan or sell your home"; the June release adds a refinance.
• Entitlement: the claim "shall not count against" the loan amount VA may guarantee for you. Default on a loan with a partial claim, though, and VA can collect its loss as a federal debt and reduce your entitlement.

Neither the statute nor VA's release states an interest rate on the partial claim itself, so get the terms in writing from your servicer before you sign.

Six missed payments: partial claim versus a 40-year modification, by rank

The table takes a loan whose principal and interest payment equals 2026 BAH with dependents at Eglin AFB (MHA FL056), closed five years ago for 30 years at an example 2.75 percent, the kind of rate many borrowers locked in before rates rose. The borrower misses six payments. A partial claim pays those six and leaves the payment alone. The alternative is a 40-year modification, the longest term VA lists, that adds the six payments to the balance at an example 6.75 percent. Both rates are illustrations, not quotes. Escrow is left out. BAH depends on grade, not years, so years of service do not change a row.

Six missed payments come to about 2.8 percent of the balance in every row, far under the 25 percent cap, so the cap only binds after a long delinquency. The modification raises the payment about 34 percent at every grade. That is the gap VASP used to close with its 2.5 percent rate and the partial claim now closes by not touching the rate at all. Check your own BAH in the BAH calculator and the loan side in the VA loan calculator.

If you are still in uniform

The Servicemembers Civil Relief Act adds a protection, but only for a mortgage that "originated before the period of the servicemember's military service." For that loan, a sale or foreclosure "shall not be valid if made during, or within one year after," your service unless a court orders it or you signed a waiver under 50 U.S.C. 3918. A VA loan you took out while serving does not get that protection. The SCRA calculator covers the 6 percent interest cap on pre-service debt.

If you are behind now

You do not apply to VA. Call your servicer, the company on your monthly statement, and ask directly whether it is processing VA partial claims yet; until November 28, 2026 the answer can be no. If you cannot get a straight answer, VA's loan technicians are at 877-827-3702, option 6, Monday through Friday, 8:00 a.m. to 6:00 p.m. ET. VA assigns a technician automatically once a VA-guaranteed loan is 61 days past due. A borrower already moved into a modification before June 2026 keeps that loan; nothing in section 3737 reopens VASP or undoes a signed modification.

Buying instead? The guaranty works as it did: see the VA funding fee calculator and the 2027 county limits in the loan limits guide. BAH figures are the 2026 DoD rates in our data, effective January 1, 2026. Always verify with your finance office and your servicer before making financial decisions.