Qualifying For Mortgage After Bankruptcy

Mortgage loan borrowers can qualify for mortgage after bankruptcy. Every mortgage loan program have mandatory waiting period after bankruptcy. To qualify for FHA Loan after bankruptcy, there is a two year waiting period after the discharge date of a Chapter 7 Bankruptcy. A home buyer can qualify for a FHA Loan one year into a Chapter 13 Bankruptcy as long as they have been timely with all of their payments to their creditors and have the approval of the trustee of the Bankruptcy Court. You can qualify for a VA Loan two years after a Chapter 7 Bankruptcy. You can qualify for a conventional loan four years after a Chapter 7 Bankruptcy with a 5% down payment. You can qualify for a conventional loan two years after a Chapter 13 discharged date and four years after a Chapter 13 dismissal date. On this blog article, we will cover qualifying for conventional loans after bankruptcies and Fannie Mae Guidelines On Multiple Bankruptcies.

Types Of Bankruptcies

A Chapter 7 Bankruptcy is often called total liquidation. With a Chapter 7 Bankruptcy, all of the consumer’s assets gets liquidated and the proceeds goes to pay the consumer’s creditors. Most folks who file Chapter 7 Bankruptcy have little or no assets and many debts and judgments. Most debts can get wiped out with a Chapter 7 Bankruptcy and the consumer can get a fresh start in life. All collection activities from creditors needs to stop the date the consumer files Chapter 7 Bankruptcy. All collection accounts, judgments, wage garnishments, bank levy, and all unsecured and/or secured debts are discharged with a Chapter 7 Bankruptcy. However, any government loans such as student loans, federal and income taxes, child support, alimony, and court fines cannot be discharged with a Chapter 7 Bankruptcy. Any creditor that a consumer owe’s or thinks he owes needs to be listed on the Chapter 7 Bankruptcy Petition and the debts are normally discharged in 90 days. That date is called the discharged date of the Chapter 7 Bankruptcy and it is on that date that the consumer no longer owes any more money to any creditors and has a fresh financial start in life.

A Chapter 13 Bankruptcy is called restructuring of debt and is where the courts restructures the consumer’s debts and takes a percentage of the consumer’s wages and uses that portion to pay the creditors. The payment plan normally is for a period of three to five years and after that period is over, the remaining balance gets wiped out and the consumer is no longer responsible for any more debts and has a fresh start with their financial life. In order to qualify for a Chapter 13 Bankruptcy, the consumer needs a full time job. In the event if the consumer loses their jobs for an extended period of time during the Chapter 13 Bankruptcy repayment period, the Chapter 13 Bankruptcy gets dismissed and the consumer can convert the Chapter 13 Bankruptcy into a Chapter 7 Bankruptcy and get all of their debts discharged.

Qualifying For Conventional Loan After Bankruptcy

Home buyers can qualify for conventional loan after bankruptcy after four years from the discharged date of the Chapter 7 Bankruptcy. Minimum credit scores to qualify for conventional loans are 620 FICO. Conventional mortgage lenders want no late payments after the discharged date of the bankruptcy and want to see re-established credit after bankruptcy. A minimum 5% down payment is required to qualify for conventional loans. First time home buyers can qualify with 3% down payment with Fannie Mae and home buyers who did not own a home for the past three years can qualify for a conventional loan with 3% down payment with Freddie Mac.

There is a two year waiting period to qualify for a conventional loan after a Chapter 13 Bankruptcy discharged date with no late payments after the Chapter 13 Bankruptcy and re-established credit. In the event if the conventional mortgage loan borrower did not complete the Chapter 13 Bankruptcy and had their Chapter 13 Bankruptcy dismissed, then there is a four year waiting period after the Chapter 13 Bankruptcy dismissal date. No late payments and re-established credit is a must after the Chapter 13 Bankruptcy dismissal date in order to qualify for a conventional loan.

What Are Fannie Mae Guidelines On Multiple Bankruptcies

Fannie Mae Guidelines On Multiple Bankruptcies within the past seven years is a five year waiting period from the latest bankruptcy discharged date.  Fannie Mae Guidelines On Multiple Bankruptcies applies when a mortgage loan borrower had a Chapter 13 bankruptcy and a Chapter 7 bankruptcy. There is an exception to the Fannie Mae Guidelines On Multiple Bankruptcies where if the mortgage loan borrower can prove that the Chapter 13 Bankruptcy was clearly converted to a Chapter 7 Bankruptcy without any gaps in time. Anything other than this will be fall under Fannie Mae Guidelines On Multiple Bankruptcies and a 5 year waiting period after the latest discharged date of the bankruptcy will apply. If they can prove that the Chapter 7 Bankruptcy was converted to a Chapter 13 Bankruptcy without any gaps in time, then it WILL NOT fall under Fannie Mae Guidelines On Multiple Bankruptcies and a four year waiting period after the latest bankruptcy discharge date will apply.

New Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

If you have a mortgage part of bankruptcy, new Fannie Mae Guidelines state that you can qualify for a conventional loan four years after the discharged date of the Chapter 7 Bankruptcy even though the recorded date of the foreclosure is after the Chapter 7 Bankruptcy discharged date. The waiting period for the foreclosure is exempt if your mortgage is part of bankruptcy and the four year waiting period starts from the bankruptcy discharge date. To qualify for a conventional loan if you have mortgage part of bankruptcy, you must meet all other Fannie Mae mortgage lending guidelines which includes a 5% down payment on the home purchase and a 620 minimum credit score.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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