2017 FHA Chapter 13 Bankruptcy Guidelines

This BLOG 2017 FHA Chapter 13 Bankruptcy Guidelines Was Written By Gustan Cho

2017 FHA Chapter 13 Bankruptcy Guidelines Update: Many home buyers who are either in a Chapter 13 Bankruptcy Repayment Plan or just had a Chapter 13 Bankruptcy discharged are often confused when they consult with a mortgage lender to see if they qualify for a FHA Loan. One of the most often questions I get from my borrowers are the different types of answers they get from lenders who they consult with on the what is the waiting period for borrowers who got a Chapter 13 Bankruptcy discharge. Loan officers give these folks different answers. One lender may tell a borrower that there is a one year waiting period to qualify for a FHA Loan After Chapter 13 Bankruptcy  while another lender may say it is a two year period after a Chapter 13 Bankruptcy discharged date to qualify for a FHA Loan. The true and real answer per 2017 FHA Chapter Bankruptcy Guidelines is that there is no waiting period to qualify for a FHA Loan after a Chapter 13 Bankruptcy Discharge Date but needs to be a manual underwrite if the Chapter 13 Bankruptcy discharge has not been seasoned for two years. We will go into details on how a borrower can qualify for a FHA Loan per 2017 FHA Chapter Bankruptcy Guidelines on this BLOG but will cover the mechanics on qualifying for a FHA Loan after 2017 FHA Chapter Bankruptcy Guidelines for both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. A borrower can also qualify for a FHA Loan one year into a Chapter 13 Bankruptcy Repayment Plan  per 2017 FHA Chapter Bankruptcy Guidelines.

Qualifying For FHA Loans After Chapter 7 Bankruptcy And Chapter 13 Bankruptcy

Under 2017 FHA Chapter Bankruptcy Guidelines, the waiting period to qualify for a FHA Loan after a Chapter 7 Bankruptcy and Chapter 13 Bankruptcy is two years after the discharge dates of both Chapter 7 and Chapter 13 Bankruptcies. However, there is an exemption with qualifying for a FHA Loan After Chapter 13 Bankruptcy Discharge date where their is NO WAITING PERIOD AFTER A CHAPTER 13 BANKRUPTCY DISCHARGED DATE as long as the borrower’s mortgage application is manually underwritten. You will not get an approve/eligible unless the Chapter 13 Bankruptcy discharged date has been seasoned for at least two years so that is why it needs to be manually underwritten. Remember that all manual underwrites needs verification of rent.

Qualifying For FHA Loan After Chapter 7 Bankruptcy

Here are the qualification requirements on qualifying for 2017 FHA  Guidelines Loan After Chapter 7 Bankruptcy

Borrowers can qualify for a FHA Loan two years after a Chapter 7 Bankruptcy discharged date. Here are the requirements in qualifying for FHA Loan after a Chapter 7 Bankruptcy discharged date:

  • Two years needs to have elapsed from the discharged date of the Chapter 7 Bankruptcy discharged date
  • The borrower must have re-established credit and timely payment history after the Chapter 7 Bankruptcy discharge
  • Late payments after a Chapter 7 Bankruptcy is considered extremely bad and most lenders will not approve a borrower with any late payments after a Chapter 7 Bankruptcy discharge no matter how small the monthly payment may be. There are cases where borrowers with late payments can qualify for a FHA Loan after late payments after Chapter 7 Bankruptcy discharged date. Contact Gustan Cho at 262-716-8151 or email at gcho@gustancho.com
  • There are cases where a borrower can qualify for a FHA Loan one year after a Chapter 7 Bankruptcy discharged date via the FHA BACK TO WORK EXTENUATING CIRCUMSTANCES MORTGAGE LOAN PROGRAM if and only if the Chapter 7 Bankruptcy was caused due to the borrower being laid off and/or fired by their employer and they had perfect timely payment history on all of their obligations until the date of the extenuating event and their household income has dropped by at least 20% or more

Qualifying For FHA Loan During Chapter 13 Bankruptcy Repayment Period

2017 FHA Chapter 13 Bankruptcy Guidelines state that a borrower can qualify for a FHA Loan as long as they meet the following guidelines:

  • A borrower can qualify for a FHA Loan one year into the Chapter 13 Bankruptcy Repayment Plan
  • 12 months of timely payments need to have been made and proof of payment needs to be provided to mortgage lender
  • Bankruptcy Trustee needs to approve of mortgage loan if the borrower is into a Chapter 13 Bankruptcy Repayment Plan
  • Borrower needs to have verification of rent where 12 months canceled checks for their rent and/or bank statements showing timely payment for their rental payment
  • If borrower is renting from a property management company, a VOR, or verification of rent is sufficient in lieu of canceled checks and/or 12 months banks statements
  • Verification of rent form is provided by lender which the property manager of the property management company needs to complete sign, date, and stamp
  • All FHA Loans during and after Chapter 13 Bankruptcy discharge date are all manual underwriting and compensating factors is a must.
  • One or more late payments during the Chapter 13 Bankruptcy Repayment Period can be an automatic disqualification

FHA Lenders With No Lender Overlays

2017 FHA Chapter 13 Bankruptcy Guidelines state there is no waiting period to qualify for a FHA Loan after Chapter 13 Bankruptcy discharged date. Many lenders who tell borrowers that there is a one year waiting period or two year waiting period to qualify for a FHA Loan after Chapter 13 Bankruptcy discharged date are those who have FHA Lender Overlays. FHA Lenders can have additional stricter lending requirements called FHA Lender Overlays which is above and beyond the minimum FHA Guidelines. If you are looking for a FHA Lender with no lender overlays, contact Gustan Cho with The Gustan Cho Team at 262-716-8151 or email Gustan Cho at gcho@gustancho.com. The Gustan Cho Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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.

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