Buying House During And After Chapter 13 Bankruptcy
This BLOG On Buying House During And After Chapter 13 Bankruptcy Was PUBLISHED On May 13th, 2019
Buying House During And After Chapter 13 Bankruptcy allowed?
- Buying House During And After Chapter 13 Bankruptcy is allowed with FHA and VA Loans
- Many people do not realize that Chapter 13 Bankruptcy is allowed with VA and FHA Loans
- Even many bankruptcy attorneys do not realize that Buying House During And After Chapter 13 Bankruptcy is allowed
- However, many lenders will require a mandatory waiting period after a Chapter 13 Bankruptcy discharged date to qualify for FHA and VA Loans
- Under HUD and VA Mortgage Guidelines, there is no waiting period after Chapter 13 Bankruptcy discharged date to qualify for home loans
- However, any Chapter 13 Bankruptcy discharge that has not been seasoned for at least two years, it needs to be manually underwritten
- Manual underwrites are allowed on VA and FHA Loans
In this blog, we will discuss Chapter 13 Bankruptcy and the eligibility requirements.
FHA Versus VA Home Loans
FHA and VA Loans are the only two mortgage loan programs that allow Buying House During And After Chapter 13 Bankruptcy.
- FHA and VA Loans have the exact same guidelines when it comes to Buying House During And After Chapter 13 Bankruptcy
- FHA Loans is one of the most popular home loan programs in the United States
- FHA allows home buyers with less than perfect credit with at least 580 FICO qualify for a 3.5% down payment home purchase loan
- Borrowers with under 580 credit scores and down to 500 FICO can qualify for FHA Loans but need 10% down payment
- VA Loans is the best loan program in the U.S.
- However, not everyone can qualify for VA Loans
- Borrowers need to be an active and/or retired member of our U.S. Armed Services with a certificate of eligibility (COE) to be eligible to qualify for VA Home Loans
- There is no minimum credit score requirement nor debt to income ratio requirement on VA Loans with an approve/eligible per automated underwriting system
- Again, VA and FHA Loans are the only two mortgage programs that allow Buying House During And After Chapter 13 Bankruptcy
We will discuss the eligibility requirements in Buying House During And After Chapter 13 Bankruptcy with VA and FHA Loans.
FHA And VA Mortgage Guidelines During Chapter 13 Bankruptcy Repayment Period
As mentioned earlier, VA and FHA have the same mortgage guidelines when it comes to qualifying for home loans during Chapter 13 Bankruptcy Repayment Period.
- Borrowers need to have made 12 months of timely payments to the Trustee
- Borrowers need to get permission by the Bankruptcy Trustee
- Most will not have any issues in getting Bankruptcy Trustee Approval as long as they are able to afford their proposed housing payment
- It needs to be manual underwriting
- Manual Underwriting Guidelines Applies
- Borrowers with higher debt to income ratios need to have compensating factors
Compensating factors are required for borrowers with higher debt to income ratios on manual underwriting.
FHA And VA Mortgage Guidelines After Chapter 13 Bankruptcy Repayment Period
Under VA And HUD Agency Mortgage Guidelines, there is no waiting period to qualify for VA and FHA Loans after Chapter 13 Bankruptcy discharge date.
- However, if the Chapter 13 discharge has not been seasoned for at least two years, it needs to be a manual underwrite
- Manual underwriting means a human underwriter needs to manually underwrite the mortgage loan since the file cannot get an approve/eligible per AUS
- Many of our viewers reading this article may have gone to lenders and told they do not qualify for VA and/or FHA Loans after Chapter 13 Bankruptcy unless 2 years have passed
- This is not true per agency guidelines
- Most lenders will require a one and/or two-year waiting period after discharge date but this is not agency guidelines but lender overlays
- Lenders can require a waiting period after a Chapter 13 discharge date even though agency guidelines do not require it due to lender overlays
Each lender can have overlays which are additional lending requirements that are above and beyond agency guidelines.
Qualifying For A Mortgage With No Overlays
Gustan Cho Associates are lenders with no overlays on government and conventional loans. A large percentage of our VA and FHA Loans are manual underwrites. We are experts in helping borrowers qualify for VA and FHA Loans during and after Chapter 13 Bankruptcy. For more information on this topic and/or other mortgage topics, please contact us at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org. Gustan Cho Associates Mortgage Group are available 7 days a week, evenings, weekends, and holidays.