Best Mortgage Lenders After Bankruptcy | Lenient Guidelines

In this article, we will be covering and discussing how to choose the best mortgage lenders after bankruptcy.  We will advise on how to shop for the best mortgage lenders after bankruptcy with the best mortgage rates. FHA and VA loans are two government loan programs for owner-occupant mortgages. FHA and VA loans are two of the three government loan programs available in the United States. Government loans are originated and funded by private lenders. Lenders offer government loans with little to no down payment at competitive rates due to the government guarantee. The best mortgage lenders after bankruptcy will not penalize you on mortgage rates. Besides FHA and VA loans, non-QM loans can be an option. However, non-QM loans require a 20% down payment. We will focus on the best mortgage lenders after bankruptcy with lenient guidelines on FHA and/or VA loans.

The Best Mortgage Lender After Bankruptcy for FHA and VA Loans During Chapter 13

Eligible borrowers with a Certificate of Eligibility can qualify for VA loans. HUD and VA Bankruptcy Agency Mortgage Guidelines are similar and almost the same. HUD, the parent of FHA, is the agency in charge of FHA loans. The Department of Veterans Affairs is the agency that sets rules and regulations on VA loans. Although the guidelines are very similar for FHA and VA Bankruptcy Loans, VA agency guidelines are more lenient than HUD. What this means is it is easier to qualify for VA versus FHA loans with a prior bankruptcy and prior bad credit. This holds especially true on manual underwrites.

Difference Between FHA vs VA Loans During Chapter 13 Repayment

FHA and VA loans are the only two loan programs that allow manual underwriting on home mortgages. We will cover more on manual underwriting in later paragraphs in this article on best mortgage lenders after bankruptcy. Borrowers can qualify for FHA and VA Bankruptcy Loans after meeting certain waiting period requirements.

There are two different types of bankruptcies:

  • Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy

There are certain agency lending guidelines on FHA and VA Chapter 7 versus Chapter 13 Bankruptcy. We will be covering the eligibility requirements on FHA/VA Chapter 7 versus Chapter 13 Bankruptcy mortgage guidelines.

Best Mortgage Lenders After Bankruptcy For Chapter 7 Bankruptcy

Chapter 7 Bankruptcy Explained

In this section, we will cover the two different types of bankruptcies that are most common for homebuyers. Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 Bankruptcy is often referred to as total liquidation. What this means is the person’s debts are liquidated to pay creditors. Filers of Chapter 7 Bankruptcy do have exempt assets they can keep (consult your bankruptcy attorney).

Filing Bankruptcy

Chapter 7 Bankruptcy benefit people who have little to no income, does not have a stable source of income, has little to no assets, have substantial outstanding collections/charged-off accounts, has judgments, and has mainly unsecured debts. Depending on the area, there is a maximum income cap for individuals and married couples for those who can qualify for Chapter 7 Bankruptcy. Petitioners need to meet the Chapter 7 Bankruptcy Means Test.

How Long Does It Take For Chapter 7 Bankruptcy Discharge

From the time a person files Chapter 7 Bankruptcy, it takes normally 90 to 120 days for a discharge. What a discharge means is the Bankruptcy Trustee will recommend to the United States Bankruptcy Court Judge that all of the petitioner’s debt be discharged. During this time frame, the Bankruptcy Trustee will schedule a meeting of creditors where creditors can contest the bankruptcy. Normally, most creditors will not show up at the meeting of creditors. This means the petitioner will no longer be obligated on the debts listed on the Chapter 7 Bankruptcy petition.

Would I Benefit From Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy is highly recommended for consumers who are drowning in debts and have outstanding collections, charged-off accounts, and judgments. The team at Gustan Cho Associates has helped countless people rebuild and get their credit scores over 700 FICO in less than one year after Chapter 7 Bankruptcy discharge. Both FHA and VA loans have mandatory waiting period requirements after Chapter 7 Bankruptcy.

Best Mortgage Lenders After Bankruptcy Who Can Help With Mortgage Buying and Selling a Home During Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a restructuring plan under the supervision of a Bankruptcy Trustee. Chapter 13 Bankruptcy benefits people who have assets and have a stable source of income. Under Chapter 13 Bankruptcy, the petitioner requests a debt restructuring plan. The Bankruptcy Court will appoint a trustee to the petitioner.

Best Mortgage Lenders After Bankruptcy Who Can Help With Loan Approval

The trustee will restructure the debts of the petitioner creditors over a course of 36 to 60 months. A percentage of the petitioner’s income will be allocated to pay for creditors. Creditors will get paid a monthly discounted amount that will be applied towards the petitioner’s debts. After the term of the repayment is over, the remaining debts of the petitioner are then discharged. A bankruptcy discharge means the petitioner is no longer liable for any debts and is debt-free.

What Are The Eligibility Requirements for Purchase and Refinance Mortgage Filing Chapter 13 Bankruptcy

In order to be eligible for Chapter 13 Bankruptcy, the person needs a stable income. The means of stable income can be from a full-time job and/or business. Mortgage borrowers can qualify for an FHA and/or VA loan during the Chapter 13 Bankruptcy repayment plan.

Best Mortgage Lenders After Bankruptcy With No Waiting Period Requirements

There is no waiting period to qualify for an FHA and/or VA loan after Chapter 13 Bankruptcy discharge. We will discuss and cover the qualifying guidelines during and after Chapter 13 Bankruptcy on FHA and/or VA loans. The agency guidelines on qualifying for an FHA and/or VA loan during and after Chapter 13 Bankruptcy are the same.

Best Mortgage Lenders After Bankruptcy For Loan Approval With Chapter 7

How to qualify for FHA and VA loans after Chapter 7 bankruptcy

The agency mortgage guidelines to qualify for an FHA and VA loan after Chapter 7 Bankruptcy are the same. Borrowers can qualify for an FHA and VA loan two years after the Chapter 7 Bankruptcy discharged date. Just meeting the two-year mandatory waiting period does not automatically guarantee an automatic FHA and VA loan approval.

Best Mortgage Lenders After Bankruptcy With No Lender Overlays 

To get an approve/eligible per automated underwriting system after a Chapter 7 Bankruptcy discharge, the borrower will need no late payments after bankruptcy, rebuilt, and reestablished credit. Any late payments after bankruptcy are frowned upon by lenders.

Best Mortgage Lenders After Bankruptcy Who Can Help With Late Payments After Bankruptcy

Lenders will consider anyone with late payments after bankruptcy a second offender and will most likely deny granting any loans. Borrowers should start rebuilding their credit as soon as possible after their bankruptcy discharge. The team at Gustan Cho Associates has helped thousands of people rebuild and reestablish their credit after bankruptcy. GCA Mortgage has helped thousands of people rebuild and boost their credit scores to over 700 FICO in less than one year after their bankruptcy discharge.

Best Mortgage Lenders After Bankruptcy For Manual Underwriting 

Borrowers can qualify for FHA and VA loans during and after Chapter 13 Bankruptcy. FHA and VA loans are the only two loan programs that borrowers in an active Chapter 13 Bankruptcy repayment plan can qualify for a mortgage. Chapter 13 Bankruptcy does not have to get discharged. However, it needs to be manual underwriting1

Shopping For Best Mortgage Lenders After Bankruptcy That Does Not Charge Discount Points

Bankruptcy Trustee approval is required. The team at Gustan Cho Associates will assist the borrower in getting trustee approval. People worry about the trustee’s approval of their home mortgage during the Chapter 13 Bankruptcy repayment plan. Out of the tens of thousands of people, we have helped during the Chapter 13 Bankruptcy repayment period, we never had a bankruptcy trustee not approve a home purchase.

Bankruptcy Loans During the Chapter 13 Repayment Process

To become eligible for an FHA/VA loan during the Chapter 13 Bankruptcy repayment plan, the borrower needs to be in the payment plan for at least 12 months. They need to have made timely payments to the bankruptcy trustee during the Chapter 13 Bankruptcy payment plan with no late payments. Chapter 13 Bankruptcy does not need to be discharged. Borrowers can qualify for a home purchase or refinance loan during the Chapter 13 repayment plan. It does need to be manual underwriting since the bankruptcy has not been discharged.

Best Mortgage Lenders After Bankruptcy For Cash-Out Refinance

FHA/VA Chapter 13 Bankruptcy Cash-Out Refinance Guidelines allow homeowners to refinance on rate and term and cash-out refinance during Chapter 13 bankruptcy repayment. There is no waiting period after the Chapter 13 Bankruptcy discharged date to qualify for an FHA and/or VA loan. If the discharge has been seasoned for less than 2 years, the file needs to be a manual underwrite. Gustan Cho Associates are experts in FHA and VA manual underwriting.

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