Update On 2016 FHA Bankruptcy Waiting Period

2016 FHA Bankruptcy Waiting Period And Qualification Requirements

2016 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. 2016 FHA Bankruptcy Waiting Period requirements differs for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy to qualify for a FHA Loan.

Chapter 7 Bankruptcy filings are for consumers with little to no assets and little to no income and often is called total liquidation. Chapter 7 Bankruptcies are normally filed by consumers with a lot of unsecured debts such as credit card debts, personal loans, judgments, and any 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 of the Chapter 7 Bankruptcy.

Chapter 13 Bankruptcy filings are for consumers who are employed and but are overwhelmed in debts and 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 Chapter 13 Bankruptcy Trustee to the Chapter 13 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 where 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.

2016 FHA Bankruptcy Waiting Period: Chapter 7 Bankruptcy

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 FICO credit scores. However, any mortgage loan borrowers with credit scores under 620 FICO, 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.

2016 FHA Bankruptcy Waiting Period: Chapter 13 Bankruptcy

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. You cannot qualify for a FHA Loan when you have late payments on your 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 which means that rental verification is mandatory. As mentioned earlier, rental verification is only valid only if the renter can provide 12 months canceled checks which is paid to the landlord and/or 12 months bank statements if the rental payments has been paid online. 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. If you are a home buyer who just had a Chapter 13 Bankruptcy discharge and are told you do not qualify for a FHA Loan, please do not hesitate to contact me at 262-716-8151 or email me at gcho@gustancho.com. We are FHA approved mortgage lenders with no investor overlays on FHA Loans and specialize home buyers who had prior bankruptcies qualify for FHA Loans.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

7 Comments

  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 .

    • 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.

    • 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.

    • 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