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FHA Bankruptcy Waiting Period Requirements After Chapters 7 And 13

FHA Bankruptcy Waiting Period Requirements After Chapters 7 And 13

This BLOG On FHA Bankruptcy Waiting Period Requirements After Chapters 7 And 13 Was UPDATED On June 19th, 2018

FHA Bankruptcy Waiting Period Requirements And Qualification Requirements

FHA Bankruptcy Waiting Period Requirements were release the HUD. Home Buyers can now qualify for FHA Loans after Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. FHA Bankruptcy Waiting Period requirements differs for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy to qualify for FHA Home Loans.

Chapter 7 Bankruptcy filings are for consumers with little to no assets and/or little to no income. It is commonly referred to as total liquidation.

Chapter 7 Bankruptcies are normally filed by consumers with a lot of unsecured debts such as the following:

  • credit card debts
  • personal loans
  • judgments
  • other non-government debts

Debts such as student loans, child support payments, alimony payments, tax liens, or other government debts cannot be discharged with a Chapter 7 Bankruptcy:

  • Home Buyers can qualify for a FHA Loan after a Chapter 7 Bankruptcy two years from the discharged date

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy filings are for consumers who are employed and are overwhelmed in debts.

  • Consumers file Chapter 13 because many have assets and need time to restructure their debts and protect their assets
  • Chapter 13 Bankruptcies can only be filed by consumers who have documented income because a percentage of their monthly wages will go towards paying creditors
  • When a consumer files Chapter 13 Bankruptcy, the U.S. Bankruptcy Courts will assign a Trustee to the Bankruptcy petitioner throughout the repayment period
  • The Chapter 13 Bankruptcy Trustee will gather all of the debts the consumer has and allocate a percentage of the consumer’s wages in paying the creditors for a period of time
  • The repayment plan is normally structured between three to five years
  • Creditors will get paid a fraction of what they are due until the end of the Chapter 13 Bankruptcy period
  • Once that repayment period is over, the balance of all debts the consumer owes gets wiped out, or discharged

Home Buyers can qualify for a FHA Loan one year into the Chapter 13 Bankruptcy repayment plan with the approval of the Chapter 13 Bankruptcy Trustee. Consumers who have had their Chapter 13 Bankruptcy discharged, there is no waiting period after a Chapter 13 Bankruptcy discharged date to qualify for a FHA Loan.

FHA Bankruptcy Waiting Period Requirements After Chapter 7

There is a two year mandatory waiting period to qualify for a FHA insured mortgage loan after the discharged date of a Chapter 7 Bankruptcy.

  • Just passing the mandatory waiting period after the Chapter 7 Bankruptcy does not automatically guarantee a FHA Loan approval
  • Home Buyers need to show that they have been timely with all of their payments after the Chapter 7 Bankruptcy discharged date with no late payments after the Chapter 7 Bankruptcy
  • Mortgage lenders also want to see that mortgage loan borrowers have re-established credit after Chapter 7 Bankruptcy
  • Minimum credit scores required to qualify for FHA Loan after Chapter 7 Bankruptcy is 580 credit scores
  • However, any mortgage loan borrowers with credit scores under 620, the Automated Underwriting System will request verification of rent. Verification Of Rent is only valid if the renter can provide 12 months canceled checks and/or bank statements if the rental payments were done online
  • Consumers who filed for Chapter 7 Bankruptcy should start re-establishing their credit as soon as possible after their Chapter 7 Bankruptcy. Secured Credit Cards To Re-Establish Credit is the fastest and easiest way of re-establishing credit after Chapter 7 Bankruptcy

FHA Bankruptcy Waiting Period Requirements After Chapter 13

Home Buyers can qualify for a FHA Loan with one year into their Chapter 13 Bankruptcy with the approval of their Chapter 13 Bankruptcy Trustee.

  • All payments into their Chapter 13 Bankruptcy must have been paid on time with no late payments in the past 12 months
  • Home buyers cannot qualify for a FHA Loan with late payments on Chapter 13 Bankruptcy repayment plan.

Home Buyers can qualify for a FHA Loan right after a Chapter 13 Bankruptcy discharge without any waiting period.

  • However, home buyers with a Chapter 13 Bankruptcy discharge that has been seasoned less than 2 years require that the mortgage loan file be manually underwriting 
  • Rental verification and timely payments in past 12 months is mandatory on manual underwrites
  • As mentioned earlier, rental verification is only valid only if the renter can provide 12 months canceled checks
  • Checks need to be paid to the landlord
  • 12 months bank statements if the rental payments has been paid online can be used in lieu of canceled checks
  • If the renter is leasing their apartment or home from a registered property management company,

Home Buyers with prior bankruptcies can now qualify for a FHA Loan after meeting the mandatory waiting periods and no late payments after bankruptcy. Home buyers who just had a Chapter 13 Bankruptcy discharge and are told they do not qualify for a FHA Loan, please do not hesitate to contact me at 262-716-8151 or text us for faster response. Can also email us at gcho@gustancho.com. We are FHA approved mortgage lenders with no investor overlays on FHA Loans. Gustan Cho Associates specializes in helping home buyers who had prior bankruptcies qualify for FHA Loans.

  1. Marie says

    I was wanting to know if I could be a co borrower on a mortgage after a chapter 7 . It was discharged July of this year. My boyfriend wants to buy a house and he is going to be the borrower .

    1. Gustan Cho, NMLS 873293 says

      You need to wait two years from a Chapter 7 Bankruptcy discharged date to be qualified for a FHA Loans, both as a borrower and co-borrower.

  2. Maria says

    I recently tried to applied for mortgage, but was told that since I had a active bankruptcy 13 filed 4/2013. That I had to come up with 20% down payment as per FHA rules. My bankruptcy payment have been on time and my rental of $2200 has always been on time. Please can you provide me with clarification of FHA rule. My husband is not on the bankruptcy.

    1. Gustan Cho, NMLS 873293 says

      The lender you went to is wrong. There is no waiting period after a Chapter 13 Bankruptcy discharged date to qualify for a FHA Loan. You can qualify for a FHA Loan one year into a Chapter 13 Bankruptcy Repayment plan with the approval of the Chapter 13 Bankruptcy Trustee. Please contact me at gcho@gustancho.com or call or text me at 262-716-8151.

      Gustan Cho NMLS 873293
      The Gustan Cho Team
      Gustan Cho Associates
      Website http://www.gustancho.com
      Toll Free 800-900-8569
      Direct 262-716-8151

  3. Momtomany says

    Gustan, our ch 7 discharge anniversary will be coming up in July. When should we start the pre-approval process? In addition, my father in law will be moving in with us at our new house – he has no bks and his credit is excellent. Can he be added as a co-borrower so we can afford more house? We have 2 years of on time rental payment verification. We have re-established credit and have zero lates post bk but one payday loan collection.

    1. Gustan Cho, NMLS 873293 says

      There is a two year waiting period after a Chapter 7 Bankruptcy discharge to qualify for a FHA Loan. There is a two year waiting period to qualify for a VA Loan after a Chapter 7 Bankruptcy. There is a four year waiting period to qualify for a Conventional Loan after a Chapter 7 bankruptcy. I have loan programs that is called NON QM where you can qualify for a HOME LOAN with one year after a chapter 7 bankruptcy. We can also put your father in law as the main borrower and you on title together with your father in law. Please give me a call at 262-716-8151 to further discuss your options or email me at gcho@gustancho.com

      Gustan Cho NMLS 873293
      Area Manager
      The Gustan Cho Team

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