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 Chapter 13 Bankruptcy Trustee Approval.
  • 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.
  • Mortgage Loan Applicants who are applying for a FHA Loan during or after a Chapter 13 Bankruptcy discharged date and the 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?

Folks who have recently filed bankruptcy or still are waiting for the 2 year waiting period after Chapter 7 bankruptcy to qualify for a FHA Loan should prepare to qualify for a mortgage after bankruptcy.

  • First and foremost, mortgage loan applicants cannot be late on monthly debt payments after bankruptcy. 
  • Mortgage underwriters will want to see timely payment history after 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. 
  • Consumers 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 credit and improve credit scores after bankruptcy. 
  • Consumers can get at least three secured credit cards with at least $500 credit limits, their credit scores will sky rocket in less than a year. 
  • Do not ever be late on secured credit card minimum monthly payments. 
  • Even though they are secured credit cards, they will report payment history to all three credit reporting agencies and late payments will be reported. 
  • One late payment can plummet 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 for FHA and Fannie Mae mortgage after Chapter 7 bankruptcy.

  • Those who are renting, make sure to 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 with a rental cash receipt, it will not count as verification of rent. 
  • Verification of Rent is not always required by mortgage lenders but providing 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 7 Bankruptcy, the waiting period is 2 years from the discharge date of the Chapter 7 Bankruptcy.
  •  Those who have a mortgage part of 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 USA Mortgage, a Division of DAS Acquisition Company LLC NMLS 227262,  is a national Fannie Mae, Freddie Mac, Ginnie Mae Direct Lender licensed in multiple states with no overlays on government and conventional loans.

  • USA Mortgage does not have any lender overlays on all mortgage loan programs unlike banks and other mortgage companies. 
  • With an approve/eligible per automated findings and as long a borrowers can provide the conditions requested from the Automated Underwriting System, we can not just close on the loan but close it on time.
  • 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.

Home Buyers who need to qualify for mortgage after bankruptcy with a five star direct lender with no lender overlays, please contact The Gustan Cho Team at USA Mortgage at 1-800-900-8569 or text us at 262-716-8151 for faster response. We are available 7 days a week, evenings, and weekends.

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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