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FHA 203k Rehab Loan After Bankruptcy Mortgage Guidelines

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FHA 203k Rehab Loan After Bankruptcy Mortgage Guidelines

This Article On FHA 203k Rehab Loan After Bankruptcy Mortgage Guidelines Was PUBLISHED On July 12th, 2019

FHA 203k Rehab Loan After Bankruptcy Mortgage Guidelines

FHA 203k Rehab Loan After Bankruptcy Requirements

Home buyers can qualify for an FHA 203k Rehab Loan After Bankruptcy.

There are two types of bankruptcies.

  • The first and more common type of bankruptcy is Chapter 7 Bankruptcy
  • A Chapter 7 Bankruptcy is also known as total liquidation bankruptcy where is most beneficial for consumers who have a lot of unsecured debts like credit card debts, outstanding collection accounts, judgments, and other non-governmental debts such as personal loans
  • A Chapter 7 Bankruptcy discharge will wipe off most consumer debts
  • Government debts such as government-backed student loans, tax liens, court fines, child support payments, and other debts owed to any governmental entity cannot be discharged with a Chapter 7 Bankruptcy
  • Wage garnishments, judgments, and creditors trying to levy your bank accounts or other asset accounts are no longer valid if you file Chapter 7 Bankruptcy
  • Creditors and collection agencies need to halt any and all collection activities on any consumer who has filed Chapter 7 Bankruptcy
  • Home buyers can qualify for an FHA 203k Rehab Loan After Bankruptcy after a two year waiting period from the Chapter 7 Bankruptcy discharged date

In this blog, we will cover and discuss FHA 203k Rehab Loan After Bankruptcy Mortgage Guidelines.

FHA 203k Rehab Loan After Bankruptcy: Waiting Period After Chapter 13 Bankruptcy

FHA 203k Rehab Loan After Bankruptcy: Waiting Period After Chapter 13 Bankruptcy

Home buyers can qualify for an FHA 203k Rehab Loan After a Chapter 13 Bankruptcy:

  • However, there is a two-year waiting period to qualify for an FHA 203k Rehab Loan After a Chapter 13 Bankruptcy
  • There is no waiting period to qualify for FHA Loan after Chapter 13 Bankruptcy discharged date as long as it is a manual underwriting
  • Unfortunately, all FHA 203k Rehab Loans need an approve/eligible per Automated Underwriting System
  • You will only get an automated approval per findings two years after a Chapter 13 Bankruptcy discharged date

Borrowers can qualify for an FHA Loan after a Chapter 13 Bankruptcy discharged date with no waiting period only per manual underwrite. If the discharged date of Chapter 13 Bankruptcy has been less than two years, it needs to be manual underwriting.

FHA 203K Rehab Loan After Bankruptcy: FHA Loan Versus FHA 203k Loans

FHA 203K Rehab Loan After Bankruptcy: FHA Loan Versus FHA 203k Loans

FHA 203k Rehab Loans are a combination of a construction rehab loan plus the acquisition of the property loan all in one loan program.

  • Home buyers who want to buy a fixer-upper or want to purchase a property that needs major renovations such as new kitchens, bathroom, siding, flooring, walls, millwork, windows, roof, HVAC systems, gutters, appliances, basement remodeling, attic remodeling, or need a room addition can benefit from an FHA 203k Loan
  • Lenders will give you financing for the purchase of your home plus all renovation costs
  • The home appraisal that needs to be ordered will need to be an as-is as-completed after renovation completed value appraisal
  • Home buyers need to put a 3.5% down payment on the after-improved value of the home
  • FHA 203k Loans are for owner occupant properties only
  • You cannot qualify for FHA 203k Loans for second homes or investment homes
  • Lenders view FHA 203k Rehab Loans as riskier loans
  • So mortgage rates on FHA 203k Loans are normally 0.50% higher than standard FHA Loans
  • The minimum down payment is 3.5% on the after-improved value of the property just like standard FHA Loans

All of the FHA Guidelines that apply on standard FHA Loans such as waiting periods after bankruptcy and foreclosures, FHA Guidelines On Collection Accounts, and other FHA Loan Requirements apply to qualify for FHA 203k Loans.

FHA 203k Rehab Loan After Bankruptcy Requirements

FHA 203k Rehab Loan After Bankruptcy Requirements

Here are the general FHA 203k Rehab Loan Requirements:

  1. Minimum credit scores of 580 FICO
  2. 3.5% down payment on the after-improved value of the property
  3. Debt to Income Ratios depends on each individual lender
  4. With standard FHA Loans, maximum debt to income ratios allowed is 46.9% front end and 56.9% DTI back end for borrowers with credit scores of at least 620 FICO
  5. Under 620 FICO credit score borrowers have a debt to income ratio caps of 43% DTI
  6. Outstanding collection accounts and charge offs do not have to pay off to qualify for an FHA 203k Rehab Loan
  7. Non-occupant co-borrowers are allowed as long as the non-occupant co-borrower is related to the borrower by law, marriage, or blood
  8. Only owner occupant one to four unit properties are eligible on FHA 203k Rehab Loans

If you are a home buyer looking to purchase a fixer-upper and need an FHA 203k mortgage lender, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays to take your calls and answer all of your questions.

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