Bad Credit After Bankruptcy Mortgage Lending Guidelines

This BLOG On Bad Credit After Bankruptcy Mortgage Lending Guidelines Was UPDATED On September 10th, 2018

How To REBUILD Your Credit After Bankruptcy___

Solutions To Bad Credit After Bankruptcy

Home Buyers can qualify for mortgage loans after a bankruptcy, whether it was a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy.

  • There are strict minimum waiting periods after Bankruptcy to qualify for mortgage loans
  • FHA requires a minimum of a 2 year waiting period after Chapter 7 Bankruptcy discharge date a
  • Fannie Mae and Freddie Mac require a minimum 4 year waiting period after a Chapter 7 Bankruptcy discharge date to qualify for Conventional Loans
  • There is no waiting period after a Chapter 13 Bankruptcy discharged date to qualify for FHA Loans
  • However, any FHA Loans After A Chapter 13 Bankruptcy discharge that has not been seasoned for at least two years needs to be done via manual underwriting
  • If borrower has a Chapter 13 Bankruptcy dismissal, then the mandatory waiting period is two years to qualify for a FHA Loan after dismissal

In this article, we will discuss and cover Bad Credit After Bankruptcy Mortgage Lending Guidelines.

Waiting Period After Bankruptcy On Conventional Loans

There is a 2 year waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharge date:

  • There is a four year mandatory waiting period to qualify for a conventional loan after a Chapter 13 Bankruptcy dismissal date
  • Qualifying for mortgage loans with bad credit after bankruptcy can be challenging
  • Most lenders do not allow bad credit after bankruptcy

There are a few lenders like myself that will consider borrowers with bad credit after bankruptcy.

Qualifying For Mortgage After Bankruptcy

How to qualify for a mortgage after bankruptcy

Meeting the mandatory waiting period after bankruptcy does not guarantee you a mortgage loan approval after bankruptcy:

  • Borrowers can meet the waiting period after bankruptcy requirements and the minimum credit scores to qualify for a mortgage loan as well as meet the debt to income ratio requirements
  • However, borrower’s overall credit history will be carefully analyzed and reviews
  • Most lenders will not consider any borrowers who had late payments after bankruptcy even though they may have high credit scores and great documented income
  • However, I can approve borrowers with bad credit after bankruptcy on a case by case scenario
  • If borrower has bad credit after bankruptcy due to financial irresponsibility, then no lender will approve borrower

However, if the borrower had bad credit after bankruptcy due to extenuating circumstances, then the mortgage underwriter will consider that and take that into consideration.

Examples Of Bad Credit After Bankruptcy

If mortgage loan applicants has just a few late payments after bankruptcy, they are not out of qualifying for a mortgage loan. Each late payment will be evaluated on a case by case basis.

Regarding lates after Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Short Sale, Deed In Lieu Of Foreclosure, or Foreclosure, the loan application is evaluated and analyzed on a case by case basis. 

  • Depends on type and amount of lates, reason for late payments and the whole mortgage loan file profile
  • So it will be up to the mortgage underwriter to determine if the borrower is credit worthy
  • Overdrafts will be questioned, again case by case
  • If borrower shows constant over drafts that could be an issue depending on reasons.
  • Again case by case and underwriter determination

If you have had bad credit after bankruptcy and are told that you do not qualify by banks and mortgage lenders, please contact me at 262-716-8151 or text us for a faster response. Or email us at Gustan Cho Associates at gcho@gustancho.com. We have no overlays on FHA Loans and Conventional Loans and we are an extremely aggressive direct lender where we want to close loans.

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