Qualifying For FHA And Fannie Mae Mortgage After Chapter 7 Bankruptcy

Tips In Qualifying For FHA And Fannie Mae Mortgage After Chapter 7 Bankruptcy:

Consumers who have filed bankruptcy can qualify for a FHA And Fannie Mae mortgage after chapter 7 bankruptcy after meeting waiting period after bankruptcy requirements. The waiting period to qualify for FHA and FANNIE MAE Mortgage after bankruptcy discharge date depends on the particular mortgage loan program.

  • There is a mandatory waiting period of 2 years from the discharge date of a Chapter 7 bankruptcy to qualify for a FHA Loan
  • Borrowers who filed a Chapter 13 Bankruptcy instead of a Chapter 7 can qualify for a FHA Loan one year after they filed Chapter 13.
  • With a Chapter 13 bankruptcy, the home buyer needs the approval of the Trustee of their Chapter 13 Bankruptcy Courts.
  • Timely payment history to all of their creditors under the Chapter 13 Bankruptcy Repayment agreement is required.
  • There is no waiting period after a Chapter 13 discharge date.
  • If you are applying for a FHA Loan during or after a Chapter 13 Bankruptcy discharged date and your Chapter 13 discharge has been seasoned for less than two years, it needs to be a manual underwrite.
  • All FHA manual underwriting mortgages needs verification of rent by borrowers.

When Should I Prepare Qualifying For FHA And Fannie Mae Mortgage After Chapter 7 Bankruptcy?

If you have recently filed bankruptcy or you still are waiting for the 2 year waiting period after bankruptcy to qualify for a FHA Loan, you should prepare to qualify for a mortgage after bankruptcy.

  • First and foremost, you cannot be late on your monthly debt payments after bankruptcy. 
  • Mortgage underwriters will want to see timely payment history after your bankruptcy discharge date. 
  • Just waiting out the two year waiting period after the bankruptcy discharge date will not automatically qualify you for a mortgage loan. 
  • No late payment history to qualify for a FHA and Fannie Mae Mortgage after Chapter 7 bankruptcy is expected by lenders. 
  • One or two late payments may be acceptable but is really a negative factor. 
  • You should also re-establish your credit after bankruptcy by getting several secured credit cards. 
  • Secured Credit Cards is the easiest and fastest way to re-establish your credit and improve your credit scores after bankruptcy. 
  • If you can get at least three secured credit cards with at least $500 credit limits, your credit scores will sky rocket in less than a year. 
  • Do not ever be late on your secured credit card minimum monthly payments. 
  • Even though they are secured credit cards, they will report your payment history to all three credit reporting agencies and late payments will be reported. 
  • One late payment can plummet your credit scores by more than 50 points.

Verification Of Rent

Verification of Rent is one of the most important factors for mortgage lenders in qualifying forFHA and Fannie Mae mortgage after Chapter 7 bankruptcy.

  • If you are renting, make sure you pay with a check because the only way verification of rent will count is by providing 12 months canceled checks. 
  • Many renters pay their monthly rental payments with cash and think that a cash receipt from the landlord is sufficient. 
  • Cash payments for rents is worthless and even though you have a rental cash receipt, it will not count as verification of rent. 
  • Verification of Rent is not always required by mortgage lenders but if you can provide verification of rent, it is considered as a strong compensating factor  .

Qualifying For FHA & FANNIE Mortgage After Bankruptcy On Conventional Loans

We mentioned the waiting period to qualify for FHA and Fannie Mae mortgage after bankruptcy with FHA Loans above.

  • Waiting period to qualify for a conventional mortgage after bankruptcy is 4 years from the discharge date of the Chapter 7 bankruptcy. 
  • For a Chapter 13 Bankruptcy, the waiting period is 2 years from the discharge date of the Chapter 13 Bankruptcy.
  • If you have a mortgage part of your Chapter 7 Bankruptcy, there is a four year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for a Conventional Loan.
  • The foreclosure can be recorded at a later date after the Chapter 7 Bankruptcy discharged date and it does not matter.
  • However, the foreclosure needs to be finalized in order for the borrower to qualify on Conventional Loans where a mortgage was part of the Chapter 7 Bankruptcy.

No Overlays In Qualifying For FHA And Fannie Mae Mortgage After Chapter 7 Bankruptcy

The Gustan Cho Team at CrossCountry Mortgage Inc. NMLS 3029 is a national Fannie Mae, Freddie Mac, Ginnie Mae Direct Lender licensed in 50 states with no overlays on government and conventional loans.

  • CrossCountry Mortgage does not have any lender overlays on all mortgage loan programs unlike banks and other mortgage companies. 
  • As long as you get an approve/eligible per automated findings and can provide the conditions requested from the Automated Underwriting System, we can close on your home loan. 
  • Overlays are lender’s additional guidelines on top of the minimum federal lending guidelines by HUD and/or Fannie Mae or Freddie Mae. 
  • For example, maximum debt to income ratios allowed on FHA Loans are 56.9% by HUD. 
  • Many banks and/or mortgage lenders may have lender overlays which cap the maximum debt to income ratios to no greater than 45%. 
  • Same with credit scores.  Minimum credit scores required to qualify for a 3.5% down payment FHA loan is 580 FICO. 
  • However, most banks and many mortgage lenders may have lender overlays of requiring mortgage loan applicants a 640 FICO credit score to qualify for a FHA Loan.

Related> FHA Guidelines on Mortgage After Bankruptcy

Related> Mortgage after Bankruptcy

Related> Mortgage after Bankruptcy in California

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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