FHA 203k Rehab Loan After Bankruptcy

FHA 203k Rehab Loan After Bankruptcy Requirements

Home buyers can qualify for a FHA 203k Rehab Loan After Bankruptcy. There are two types of bankruptcies. The first and more common type of bankruptcy is the 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 Wage garnishments, judgments, and creditors trying to levy your bank accounts or other asset accounts are no longer valid if you file Chapter 7 Bankruptcy.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 a FHA 203k Rehab Loan After Bankruptcy after a two year waiting period from the Chapter 7 Bankruptcy discharged date.

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

Home buyers can qualify for a FHA 203k Rehab Loan After a Chapter 13 Bankruptcy, however, there is a two year waiting period to qualify for a 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. FHA Borrowers can qualify for a FHA Loan after a Chapter 13 Bankruptcy discharged date with no waiting period only per manual underwrite if the discharged date of the Chapter 13 Bankruptcy has been less than two years.

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 a FHA 203k Loan. FHA mortgage 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 value and 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 and you cannot qualify for FHA 203k Loans for second homes or investment homes. Mortgage 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. 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 applies to qualifying for FHA 203k Loans.

FHA 203k Rehab Loan After Bankruptcy Requirements

Here are the general FHA 203k Rehab Loan Requirements:

  1. Minimum credit scores of 580 FICO credit scores.
  2. 3.5% down payment on the after improved value of the property.
  3. Debt to Income Ratios depends on each individual mortgage lender. With standard FHA Loans, maximum debt to income ratios allowed is 56.9% DTI for borrowers with credit scores of at least 620 FICO. Under 620 FICO credit score borrowers have debt to income ratio caps of 43% DTI.
  4. Outstanding collection accounts and charge offs do not have to paid off to qualify for a FHA 203k Rehab Loan.
  5. Non-occupant co-borrowers are allowed as long as the non-occupant co-borrower is related to the borrower by law, marriage, or blood.
  6. 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 a FHA 203k mortgage lender, please contact me at 262-716-8151 or email me at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays to take your calls and answer all of your question.

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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