Alex Carlucci The Mortgage Expert,
Publish On: July 21, 2022
In this blog, we will discuss and cover the bankruptcy mortgage guidelines on government and conventional loans. All mortgage loan programs have a mandatory waiting period after bankruptcy and foreclosure. Borrowers need to adhere to Bankruptcy Mortgage Guidelines to qualify for a residential mortgage loan. In the following sections, we will through the bankruptcy mortgage guidelines. We will cover the various loan programs that are best for you, your family, and your clients for loan officers.
Bankruptcy Mortgage Guidelines Frequently Asked Questions
Gustan Cho Associates are mortgage brokers in 48 states including Washington DC and Puerto Rico. Below are the most popular top frequently asked questions on bankruptcy mortgage guidelines:
- The question is when does waiting period after bankruptcy and foreclosure start?
- Waiting period after bankruptcy and foreclosure differs depending on the mortgage loan program
- For example, the waiting period after bankruptcy and foreclosure is different for FHA Loans than it is for Conventional Loans
Bankruptcy Mortgage Guidelines On Government Loans
Government Loans are home loans insured by the federal government:
There are three different types of government loans:
- FHA Loans
- VA Home Loans
- USDA Loans
For FHA and VA Loans, there is a minimum of a two year waiting period after Chapter 7 Bankruptcy to qualify. With USDA, the waiting period is three years after Chapter 7 Bankruptcy discharged date to qualify for a USDA loan.
Chapter 7 Versus Chapter 13 Bankruptcy Mortgage Guidelines
The waiting period after Chapter 7 Bankruptcy starts from the discharged date of the Chapter 7 Bankruptcy and not the Chapter 7 filing date. Borrowers in a Chapter 13 Bankruptcy Repayment plan can qualify for an FHA and/or VA loan during repayment plan without the Chapter 13 Bankruptcy being discharged. There is a one year waiting period after filing Chapter 13 Bankruptcy to qualify for VA and FHA Loans. Borrowers who qualify for an FHA and/or VA loan during Chapter 13 Bankruptcy repayment plan are manual underwriting. Chapter 13 Bankruptcy Court’s Trustee approval is required. The start date of the waiting period is from the Chapter 13 Bankruptcy file date and 12 months of timely payments needs to be made to qualify for VA and FHA Home Loans. Bankruptcy trustees will approve a housing purchase and/or refinance mortgage transaction without any issues.
FHA Chapter 13 Bankruptcy on FHA and VA Loans
FHA and VA Loans have exactly the same manual underwriting mortgage guidelines. Therefore, qualifying for a home mortgage during and after Chapter 13 Bankruptcy is exactly the same on VA and FHA loans. There is no waiting period requirements after Chapter 13 Bankruptcy discharged date to qualify for an FHA and/or VA loan. If Chapter 13 Bankruptcy discharge has not been seasoned for at least two years, the file needs to be manually underwritten. For Conventional Loans, there is a two year waiting period to qualify for a Conventional Loan after Chapter 13 Bankruptcy discharged date. With a Chapter 13 Bankruptcy dismissal, there is a four year waiting period to qualify for a Conventional Loan. The waiting period starts from the Chapter 13 Bankruptcy dismissal date. Gustan Cho Associates are experts in helping borrowers qualify for an FHA and/or VA loan during Chapter 13 Bankruptcy repayment plan. Gustan Cho Associates does not require any waiting period requirements after the Chapter 13 Bankruptcy discharged date. We are experts in manual underwriting on FHA and VA loans.
Waiting Period After Housing Event To Qualify For Government Loans
There is a mandatory waiting period after foreclosure and deed in lieu of foreclosure to qualify for FHA, VA, and USDA Loans. There is a three year waiting period after the recorded date of foreclosure and deed in lieu of foreclosure to qualify for FHA and USDA Loans. The waiting period time clock does not start from the day that the property was surrendered. The waiting period time clock starts from the date of the sheriff’s sale or from the date the deed to the home was transferred out of the home buyers name and into the lenders name or the new home buyers name. There is a two year waiting period to qualify for VA Loans after foreclosure, deed in lieu, or short sale.
Waiting Period Guidelines on Prior Mortgage Included In Bankruptcy
Homeowners who had a prior mortgage part of bankruptcy and want to qualify for FHA Loans, the waiting period starts from the recorded date of the foreclosure. Not the date of the Chapter 7 Bankruptcy discharged date. This holds true even though the mortgage was wiped off on Chapter 7 Bankruptcy discharge. For homebuyers interested in qualifying for conventional loans and who have a prior Chapter 7 Bankruptcy, there is a four-year waiting period after the bankruptcy discharge date to qualify for a conventional loan.
Fannie Mae and Freddie Mac Bankruptcy Mortgage Guidelines
Homeowners who had a prior mortgage part of bankruptcy, they can qualify for a conventional loan four years after the discharged date of bankruptcy. This is the case even if the foreclosure was recorded at a later date after Chapter 7 Bankruptcy discharged date. The mortgage cannot be reaffirmed after the bankruptcy.
Conventional Loan Waiting Period Requirements After Chapter 13 Bankruptcy
There is a two year waiting period after Chapter 13 Bankruptcy discharged date to qualify for a conventional loan. There is a four-year waiting period to qualify for a conventional loan after a Chapter 13 Bankruptcy dismissal date. Fannie Mae and Freddie Mac do not allow borrowers in an active Chapter 13 Bankruptcy repayment plan to qualify for conventional loans. The Chapter 13 Bankruptcy needs to be discharged and borrowers need to wait two years after the discharged date.
VA Bankruptcy Mortgage Guidelines
VA Bankruptcy Mortgage Guidelines with mortgage part of bankruptcy is as follows:
- If there is a mortgage included in bankruptcy, there is a two year waiting period from the discharged date of bankruptcy discharged date
- The mortgage cannot be reaffirmed
- The date of the housing event does not matter
However, the housing event needs to have been finalized as a foreclosure, deed in lieu, short sale.
USDA Bankruptcy Mortgage Guidelines
USDA Bankruptcy Mortgage Guidelines with mortgage included in bankruptcy is as follows:
- If there is mortgage included in bankruptcy, there is a three year waiting period from discharged date of bankruptcy discharged date
- The date of the housing event does not matter
However, the housing event needs to have been finalized as foreclosure, deed in lieu of foreclosure, short sale.
Conventional Loan Waiting Period Guidelines After Foreclosure
There is a seven-year waiting period to qualify for a conventional loan after a foreclosure.
- There is a four year waiting period after a short sale from the short sale date reflected on the HUD Settlement Statement to qualify for a Conventional Loan
- There is a four year waiting period after deed in lieu of foreclosure to qualify for a conventional loan to qualify for a conventional loan
- The waiting period starts from the recorded date of the deed in lieu of foreclosure and not the date that the keys were surrendered to the lender
Mortgage Experts on Home Loans After Bankruptcy
First-time home buyers and/or seasoned home buyers looking for a national mortgage company licensed in multiple states with no overlays on government and conventional loans please contact us at Gustan Cho Associates at 261-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates takes pride in having a national five star reputation of being a one-stop mortgage lending shop. We have every available non-QM and alternative finance mortgage loan program in the country. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
