AUS Approval With Late Payments After Bankruptcy

Getting a mortgage approval after bankruptcy can feel stressful. Having late payments after a bankruptcy discharge makes things even more challenging. You may have heard lenders say it’s impossible. But here’s the good news: You can get an AUS approval with late payments after bankruptcy.

At Gustan Cho Associates, we specialize in helping borrowers who’ve faced credit problems like late payments after bankruptcy. We believe everyone deserves a chance to own a home—even if you’ve made some mistakes along the way.

In this guide, we’ll explain exactly how to secure AUS approval with late payments after bankruptcy, explain your options, and show you why choosing a lender without overlays like Gustan Cho Associates matters.

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What Exactly is AUS Approval?

Automated Underwriting Systems, or AUS, are computer programs lenders use to quickly review your financial details. There are two main AUS systems lenders use:

Fannie Mae’s DU (Desktop Underwriter)
Freddie Mac’s LP (Loan Product Advisor)

These systems analyze your income, debts, credit history, and other factors. You’ll receive an “Approve/Eligible” if you meet their guidelines. This tells lenders you qualify for the mortgage based on agency standards.

Can You Get AUS Approval With Late Payments After Bankruptcy?

Yes, you can. But it’s important to know that AUS approval with late payments after bankruptcy isn’t guaranteed. Late payments after bankruptcy raise a red flag to lenders. The systems are designed to spot these issues. They may initially give you a “Refer/Eligible” or even outright deny approval.

The key is understanding exactly what these systems look for—and knowing how to address any issues that arise.

Why Do Lenders Worry About Late Payments After Bankruptcy?

When lenders think about giving loans, they see bankruptcy as a chance for a new beginning. But if you’ve had late payments after your bankruptcy, lenders get worried. They might think you can’t handle your money well again. They call people with these issues “second offenders,” and many lenders won’t even try to help them.

However, at Gustan Cho Associates, we see things differently. We believe in focusing on your current financial strength instead of your past problems. We understand you can still get AUS approval with late payments after bankruptcy. We’re here to support you and help you move forward.

Real-World Example of Getting AUS Approval

Here’s a recent case showing how AUS approval with late payments after bankruptcy works in real life:

A borrower named Sarah filed for Chapter 7 bankruptcy three years ago. Two years after her bankruptcy, Sarah had a 90-day late payment on her student loan. Although she had a strong credit score 680 and had paid all bills on time since then, her late payments initially prevented her from getting automated approval.

Here’s what we did:

First, we ran her details through Fannie Mae’s DU with a 10% down payment. Unfortunately, Sarah got a “Refer/Eligible.”
Next, we tried Freddie Mac’s LP with a 5% down payment, and she still got “Refer/Eligible.”
Finally, we increased the down payment slightly to 10%, and Freddie Mac LP gave Sarah an “Approve/Eligible.”

This situation clearly illustrates that Freddie Mac’s LP system is more lenient regarding late payments following bankruptcy than Fannie Mae’s DU system. Recognizing these distinctions can greatly influence the result.

How to Improve Your Chances for AUS Approval With Late Payments After Bankruptcy

Here are the best tips for getting an automated underwriting approval:

Increase Your Down Payment: A slightly higher down payment shows lenders you’re serious and reduces their risk.
Maintain Perfect Payments Moving Forward: Make all your payments on time every month after your late payments. The longer your recent clean record, the better your chances.
Lower Your Debt-to-Income (DTI) Ratio: Paying down credit cards or other debts will lower your monthly payments, improving your financial profile for AUS.
Add Cash Reserves: Having extra money in savings can convince AUS that you’re financially stable, even with late payments in the past.
Use Compensating Factors: High credit scores, steady employment, or a good rental history can offset the negative impact of late payments.

Lender Overlays and Why They Matter

Lender overlays are extra rules banks add on top of standard AUS guidelines. Even if you get an “Approve/Eligible,” lenders with overlays can still deny you. For instance, many lenders reject any borrower with late payments after bankruptcy, regardless of the automated findings.

At Gustan Cho Associates, we never add these extra restrictions. We trust the automated underwriting systems completely. If you get an AUS approval, we close your loan. It’s as simple as that.

Recent Updates for AUS Approval With Late Payments After Bankruptcy (2025)

Here’s what’s important to know in 2025:

Freddie Mac LP remains more forgiving on late payments after bankruptcy than Fannie Mae DU.
The housing market has tightened, but agencies still approve borrowers with strong compensating factors.
Gustan Cho Associates continues to approve loans strictly based on automated findings, without overlays.

Simple Steps to Getting AUS Approval with Late Payments After Bankruptcy

The journey to owning a home can be difficult, particularly when it comes to AUS approval with late payments after bankruptcy. However, you can secure the mortgage you need with the right guidance and resources. Follow these easy steps with Gustan Cho Associates:

Call or Email Us: Tell us your story. We’re here to listen.
Run Your AUS: We check both Fannie Mae DU and Freddie Mac LP to find your best option.
Create an Action Plan: If your AUS isn’t approved initially, we help you identify quick actions (like paying down debts or adding savings) to turn your “Refer” into an “Approve.”
Close Your Loan: Once approved, we’ll move quickly to close your mortgage smoothly.

Why Choose Gustan Cho Associates?

Here’s what sets us apart:

Zero Overlays: We approve borrowers based purely on automated AUS findings.
Specialized Knowledge: We’re experts in FHA, VA, USDA, conventional, and non-QM loans.
Personal Attention: Our loan officers help you step-by-step through the approval process.
Available 7 Days a Week: We understand mortgage issues don’t stop on weekends or holidays. We’re always here for you.

Over 75% of our borrowers were initially denied by other lenders. When other banks say no, Gustan Cho Associates says yes.

Get Started Today

Late payments after bankruptcy don’t have to stop you from owning your home. AUS approval with late payments after bankruptcy is possible, especially with an experienced lender like Gustan Cho Associates.

If you have any questions about AUS approval with late payments after bankruptcy or borrowers who need to qualify for loans with a lender with no overlays, please contact us at 800-900-8569, text us for a faster response, or email alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

Frequently Asked Questions About AUS Approval with Late Payments After Bankruptcy:

Q: Can I Get AUS Approval with Late Payments After Bankruptcy?

A: Yes, it’s possible. Lenders like Gustan Cho Associates can help you get approved using AUS, even with late payments after bankruptcy.

Q: What’s the First Step for AUS Approval with Late Payments After Bankruptcy?

A: The first step is to contact a lender without extra rules (overlays) like Gustan Cho Associates. They’ll help you run your information through AUS to check your eligibility.

Q: Does having Late Payments After Bankruptcy Automatically Disqualify Me?

A: No. While late payments after bankruptcy make approval harder, it doesn’t automatically mean you’ll be turned down.

Q: How Can I Increase My Chances of AUS Approval with Late Payments After Bankruptcy?

A: Making a larger down payment, paying down debt, and having extra money in savings can greatly improve your chances.

Q: Why did Freddie Mac LP Approve Me But Not Fannie Mae DU?

A: Freddie Mac’s LP system tends to be more forgiving about late payments after bankruptcy than Fannie Mae’s DU system.

Q: What are Lender Overlays, and How Do They Affect My Approval?

A: Overlays are extra rules some lenders have beyond AUS guidelines. Gustan Cho Associates has no overlays, meaning if AUS approves you, you’re good to go.

Q: Can Gustan Cho Associates Help Even if Other Lenders have Said No?

A: Yes! Over 75% of borrowers at Gustan Cho Associates were turned down by other lenders before coming to us.

Q: How Long Do I Need to Make On-Time Payments to Improve My AUS Approval Chances?

A: Typically, 12-24 months of timely payments after late payments significantly improve your chances of AUS approval with late payments after bankruptcy.