Buying House During Chapter 13 Repayment Plan Mortgage Guidelines

This ARTICLE Is About Buying House During Chapter 13 Repayment Plan Mortgage Guidelines

Buying House During Chapter 13 Repayment Plan is allowed only with FHA and VA loans. Borrowers can qualify for FHA and VA loans without the Chapter 13 Bankruptcy is discharged. FHA and VA are the only two mortgage loan programs that allow homebuyers to qualify for a mortgage. All other loan programs require Chapter 13 Bankruptcy to be discharged.

HUD and the VA are the only two federal agencies that allow borrowers to qualify for a mortgage during the repayment of their Chapter 13 Bankruptcy. Trustee approval is required. Bankruptcy Trustees will approve a home mortgage during the Chapter 13 repayment period unless the home is a high end home and above the borrower’s means. Timely payments to the trustee are required. Borrowers need to be timely on all of their monthly debt payments to both inside the bankruptcy and outside of the Chapter 13 bankruptcy.

When Can Borrowers Qualify For A Mortgage After Filing Chapter 13 Bankruptcy

In order to qualify for an FHA and/or VA loan during the Chapter 13 Bankruptcy repayment period, the borrower needs to be in the payment plan for at least 12 months:

• All FHA and VA loans during Chapter 13 Repayment Period are manual underwrites
• Not all lenders do manual underwriting on FHA and/or VA loans
• The good news is Gustan Cho Associates Mortgage Group are experts in VA and FHA manual underwriting
• A large percentage of our borrowers are folks who are in a current active Chapter 13 Bankruptcy Repayment Plans
• Gustan Cho Associates has no lender overlays on government and conventional loans

In this article, we will discuss and cover the Buying House During Chapter 13 Repayment Plan Mortgage Guidelines.

Buying House During Chapter 13 Repayment Plan Mortgage Guidelines On FHA Loans

HUD, the parent of FHA allows borrowers to qualify for an FHA loan during the Chapter 13 Repayment Period. Chapter 13 Bankruptcy does not have to be discharged. Borrowers need to meet all HUD Guidelines to qualify for an FHA loan. However, all Chapter 13 FHA loans are manual underwriting. There is no waiting period after the Chapter 13 Bankruptcy discharged date.

However, if the discharge is not seasoned for at least two years, it needs to be a manual underwrite. All HUD Manual Underwriting Guidelines apply.

Here are the minimum FHA Chapter 13 Bankruptcy Guidelines:

• To qualify for a 3.5% down payment FHA loan, the minimum credit score required by HUD is 580 FICO
• HUD manual underwriting guidelines apply
• Verification of rent on all manual underwriting
• The great news at Gustan Cho Associates is if the borrowers do not have verification of rent, the borrower can get us living with the family rent-free letter in lieu of a VOR
• Chapter 13 Bankruptcy does not have to be discharged
• The bankruptcy trustee needs to approve the home purchase and/or refinance mortgage transaction
• Need to be in the Chapter 13 repayment period for at least 12 months
• No late payments during the Chapter 13 repayment period to the trustee and outside creditors outside the bankruptcy

Gustan Cho Associates are experts in helping homebuyers qualify for a mortgage during the Chapter 13 Bankruptcy repayment period.  Qualify For A Mortgage After Filing Chapter 13 Bankruptcy

What is the Average Credit Score After Chapter 13 Discharge?

After a Chapter 13 discharge, the average credit score can differ significantly based on personal situations, such as an individual’s credit history before filing, credit management during the repayment period, and overall financial conduct. However, there are some general trends:

1. Initial Impact: When a Chapter 13 bankruptcy is first filed, it can cause a significant drop in credit scores, often by 100 to 200 points or more.
2. During Repayment: As individuals make consistent payments during the Chapter 13 repayment plan (usually three to five years), they may see gradual improvements in their credit scores.
3. After Discharge: Once the Chapter 13 bankruptcy is discharged, it is possible to see credit score improvements if the individual continues to manage their credit responsibly. Some reports suggest that individuals can see their scores rise to the mid-500s to mid-600s within a year or two post-discharge.

The post-discharge credit score depends on timely payments on new credit accounts, maintaining low credit card balances, and avoiding new collections or negative entries. Rebuilding credit after a Chapter 13 discharge typically involves obtaining secured credit cards or small installment loans and consistently paying them off on time to demonstrate responsible credit behavior.

Buying House During Chapter 13 Repayment Plan VA Mortgage Guidelines

Buying House During Chapter 13 Repayment Plan Mortgage Guidelines are exactly the same as those for FHA loans. However, not everyone qualifies for a VA loan. Only eligible borrowers who have a valid certificate of eligibility can qualify for a VA loan. VA loans are the best loan program for owner-occupant homes. The VA has the lowest mortgage rates out of any other loan program.

One of the greatest benefits of VA loans is there is no mortgage insurance. A large percentage of our borrowers at Gustan Cho Associates are those applying for VA loans. The team at Gustan Cho Associates will help borrowers obtain their certificate of eligibility. There are no maximum loan limits on VA loans. Click Here To Qualify For A Mortgage After Filing Chapter 13 Bankruptcy

Minimum VA Agency Guidelines

Here are the minimum VA loan requirements:

• 100% financing with no down payment required
• There is no minimum credit score requirement on VA loans with an approve/eligible per automated underwriting system (AUS)
• There is no maximum debt to income ratio caps with an AUS Approval
• There is no maximum loan limit on VA loans

There is no mortgage insurance required on VA loans.

Qualifying For A VA Loans With A National Mortgage Company With No Lender Overlays

Being able to qualify for VA loans is one of the greatest rewards and benefits that is given by the U.S. Veterans Administration as a thank you to our members of the U.S. Military. A certificate of eligibility (COE) is priceless. VA mortgage rates are the lowest of any other loan program. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to lender overlays.

Gustan Cho Associates is one of the very few national mortgage lenders with no lender overlays on government and conventional loans.  Over 30% of our borrowers are manual underwriting files. To qualify for a home loan with a five-star national mortgage company licensed in multiple states, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

FAQs: Buying House During Chapter 13 Repayment Plan Mortgage Guidelines

• 1. Can I buy a house during a Chapter 13 repayment plan? Yes, buying a house during a Chapter 13 repayment plan is possible, but only with FHA and VA loans. Other loan programs require the Chapter 13 bankruptcy to be discharged.
• 2. Which federal agencies allow borrowers to qualify for a mortgage during Chapter 13 repayment? The Department of Housing and Urban Development (HUD) and the Department of Veterans Affairs (VA) are the only federal agencies allowing borrowers to qualify for a mortgage during the repayment period of a Chapter 13 bankruptcy.
• 3. Do I need approval from the bankruptcy trustee to get a mortgage during Chapter 13 repayment? Yes, approval from the bankruptcy trustee is required. The trustee will generally approve the mortgage unless the home is considered high-end and beyond the borrower’s financial means.
• 4. What are the FHA loan guidelines during a Chapter 13 repayment plan? It would help if you met specific guidelines to qualify for an FHA loan while on a Chapter 13 repayment plan. Firstly, a minimum credit score 580 is required if you’re aiming for a down payment as low as 3.5%. HUD’s manual underwriting guidelines are also applicable in this scenario. Additionally, if you’re renting, you’ll need to verify your rental payments, or if you’re living with family, a rent-free letter is essential. Obtaining trustee approval is another critical step in the process. Before applying, you should actively participate in the repayment plan for at least 12 months and ensure that you have no late payments during this period.
• 5. Are all FHA loans during Chapter 13 repayment manually underwritten? All FHA loans during the Chapter 13 repayment period are manually underwritten. Not all lenders offer manual underwriting, so finding one that does, such as Gustan Cho Associates, is important.
• 6. Can I qualify for a VA loan during Chapter 13 repayment? Yes, eligible borrowers with a valid certificate of eligibility (COE) can qualify for a VA loan during Chapter 13 repayment. The guidelines for VA loans are similar to those for FHA loans.
• 7. What are the minimum requirements for a VA loan during Chapter 13 repayment? What are the minimum requirements for a VA loan during Chapter 13 repayment? 100% financing, no credit score requirement, automated underwriting approval, no debt-to-income ratio cap, no loan limit, and no mortgage insurance requirement.
• 8. How can I improve my credit score during and after Chapter 13 repayment? Improving your credit score during and after the Chapter 13 repayment period involves several strategic steps. It’s essential to make timely payments throughout the repayment plan and manage your credit responsibly after discharge. Consider obtaining secured credit cards or small installment loans, ensuring you pay them off on time to positively impact your credit score.
• 9. How should I apply for a mortgage during Chapter 13 repayment? Contact a lender such as Gustan Cho Associates, specializing in manual underwriting for FHA and VA loans. They can help you navigate the process and meet the necessary requirements.
• 10. How can I contact Gustan Cho Associates for more information? You can reach Gustan Cho Associates by calling 800-900-8569, texting for a faster response, or emailing gcho@gustancho.com. Their team is available 7 days a week, including evenings, weekends, and holidays.

If you have any questions about Buying House During Chapter 13 Repayment Plan Mortgage Guidelines or you 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 us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Qualify For A Mortgage After Filing Chapter 13 Bankruptcy

This blog about the Buying House During Chapter 13 Repayment Plan Mortgage Guidelines was updated on June 5th, 2024.