Can I Qualify for FHA 203k Loan After Bankruptcy?

The Federal Housing Administration has an acquisition and construction mortgage loan program for owner occupied home buyers. The acquisition and construction mortgage loan is called FHA 203k Rehab Loans. Home buyers who have creative ideas of remodeling their homes or are interested in buying a fixer upper or foreclosure properties can now have the option to do so with a FHA 203k Rehab Loan. Most construction loans require that the property owner have skin in the game where majority of rehab lenders will require a 20% down payment. This is not the case with a FHA 203k Loan. FHA only requires FHA 203k mortgage loan borrowers to have a 3.5% down payment on the after improved value of the property. For example, if you were to purchase a home for $100,000 and the home needs $100,000 in home improvements where the total acquisition and construction costs are $200,000 and the after improved value of the completed project is $200,000, then you are required a 3.5% down payment, or $7,000, as the total funds required plus your closing costs. I get many calls from home buyers who are interested in seeing if they qualify for a FHA 203k Loan After Bankruptcy. The answer is yes. Home buyers can qualify for a FHA 203k Loan After Bankruptcy.

About FHA 203k Rehab Loans

There are two types of FHA 203k Rehab Loans. The first and most popular is the FHA 203k Streamline Rehab Loans which limits the construction budget to $35,000. The FHA 203k Streamline Rehab Loan program limits the homeowner on the type of work that they can do. Homeowners cannot do structural changes to the existing home or do a room addition or any other structural repairs. They can do kitchen remodeling, basement remodeling, attic remodeling, bathroom remodeling, new flooring, new windows, new millwork, paint, new siding, new gutters, new plumbing, new electric, new heating and air conditioning systems, and new appliances.

The second type of FHA 203k Rehab Loan is the full standard FHA 203k Loan program where there is no construction limit. A full standard FHA 203k Loan mortgage borrower can borrower as much as they can to do rehab on their property as long as the rehab will support the after repair value appraisal once the job has been completed. Besides being able to do everything you can do on a FHA 203k Streamline Loan, you can also do structural repairs and room additions with a Full FHA 203k Rehab Loan.  You can even do a complete gut rehab construction project with a full standard FHA 203k Loan.

Requirements In Qualifying For FHA 203k Loan After Bankruptcy

Home buyers seeking a fixer upper mortgage loan can now purchase a home of their dreams with a FHA 203k Loan. Qualifying for FHA 203k Loan After Bankruptcy is no issue as long as you have waited out the two year mandatory waiting period after your bankruptcy discharge date. To qualify for FHA 203k Loan After Bankruptcy, you need a minimum of a 580 FICO credit score and must meet FHA lending guidelines. FHA 203k Mortgage Lenders do expect you to have re-established credit after your bankruptcy and no late payments or derogatory credit after your bankruptcy discharge. Whether it is a FHA 203k Streamline Rehab Loan or Full Standard FHA 203k Loan, please contact me at 262-716-8151 if you are interested in pursuing a FHA 203k Loan After Bankruptcy.

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.


  1. Ben says:

    I have extenuating circumstances involved in my bankruptcy. I could not find and/or keep employment due to disability. I filed a claim for VA disability which was finally awarded a year later at 100% compensable rating. Also, with rehabilitation I was finally able to secure permanent Federal employment, so I have two incomes and a great credit score. By that time, however, it was too late and I had already filed ch7 and did a short sale. I know some loan products will shorten the waiting period if there were extenuating circumstances. Is this the case with 203K?

    • Gustan Cho, NMLS 873293 says:

      FHA 203k Loan Programs has the same guidelines as a regular FHA Loan. However, there are overlays with FHA 203K loans such as maximum debt to income ratios of 50% dti AND we like to see a 640 FICO credit score. Whatever FHA guidelines are, it applies the same with 203k Loans. Your rates on 203k loans will be higher so after you complete the rehab via 203k loan, your property will appreciate much higher than the rehab cost invested. Please contact me if you have any questions.

      Gustan Cho NMLS 873293
      Area Manager
      The Gustan Cho Team