This article is about FHA Bankruptcy waiting periods after Chapters 7 and 13. FHA Bankruptcy wqiting period requirements were release the HUD. Homebuyers can now qualify for FHA loans after Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Please remember that FHA loan guidelines and lender-specific requirements may vary. Consult with a HUD-approved lender to get the most up-to-date information and determine your eligibility based on your unique financial situation. Not all lenders have the same lending requirements since.
FHA Bankruptcy waiting periods differs for Chapter 7 Bankruptcy and Chapter 13 bankruptcy to qualify for FHA home loans. Rental verification and timely payments in past 12 months is mandatory on manual underwrites.
Based on information as of the latest HUD updates, there may have been updates or changes to HUD loan requirements or FHA bankruptcy waiting periods since that time. For the latest information, be sure to verify the current guidelines with a knowledgeable professional or the U.S. Department of Housing and Urban Development (HUD). In the following paragraphs, we will cover about the FHA Bankruptcy waiting periods after Chapters 7 and 13.
Filing Chapter 7 Bankruptcy
Chapter 7 Bankruptcy filings are for consumers with little to no assets or little to no income. It is commonly referred to as total liquidation. As mentioned earlier, rental verification is only valid only if the renter can provide 12 months canceled checks. Checks need to be paid to the landlord. 12 months bank statements if the rental payments has been paid online can be used in lieu of canceled checks. Chapter 7 Bankruptcies are normally filed by consumers with a lot of unsecured debts such as the following:
- credit card debts
- personal loans
- judgments
- other non-government debts
Debts such as student loans, child support payments, alimony payments, tax liens, or other government debts cannot be discharged with a Chapter 7 Bankruptcy. Homebuyers can qualify for a FHA loan after a Chapter 7 Bankruptcy two years from the discharged date. In this guide, we will cover the general FHA bankruptcy waiting periods for HUD, the parent of FHA (Federal Housing Administration) loans after Chapter 7 and Chapter 13 bankruptcies.
Click here to filing chapter 7 bankruptcy
HUD Guidelines on FHA Bankruptcy Waiting Periods
You will need to wait at least two years from the date of discharge before you can apply for an FHA loan. You need to demonstrate that you can document that those circumstances have since been resolved. For Chapter 13 bankruptcy cases, you may be eligible for an FHA loan while still in a Chapter 13 repayment plan, provided you have made at least 12 months of on-time payments and have received approval from the bankruptcy court. Suppose you have completed the Chapter 13 repayment plan and obtained a discharge. In that case, you may be eligible for an FHA loan with no waiting period, assuming you meet all other FHA loan requirements.
FHA Bankruptcy Waiting Periods After Chapter 13
Chapter 13 Bankruptcy filings are for consumers who are employed and are overwhelmed in debts. Consumers file Chapter 13 because many have assets and need time to restructure their debts and protect their assets. Chapter 13 Bankruptcies can only be filed by consumers who have documented income because a percentage of their monthly wages will go towards paying creditors.
When a consumer files Chapter 13 Bankruptcy, the U.S. Bankruptcy Courts will assign a Trustee to the Bankruptcy petitioner throughout the repayment period.
The Chapter 13 Bankruptcy Trustee will gather all of the debts the consumer has and allocate a percentage of the consumer’s wages in paying the creditors for a period of time. The repayment plan is normally structured between three to five years. Creditors will get paid a fraction of what they are due until the end of the Chapter 13 Bankruptcy period. Once that repayment period is over, the balance of all debts the consumer owes gets wiped out, or discharged.
FHA Bankruptcy Waiting Periods During Chapter 13 Repayment Plan
Homebuyers can qualify for a FHA loan one year into the Chapter 13 Bankruptcy repayment plan with the approval of the Chapter 13 Bankruptcy Trustee. Consumers who have had their Chapter 13 Bankruptcy discharged, there is no waiting period after a Chapter 13 Bankruptcy discharged date to qualify for a FHA loan.
Homebuyers need to show that they have been timely with all of their payments after the Chapter 7 Bankruptcy discharged date with no late payments after the Chapter 7 Bankruptcy.
Homebuyers can qualify for a FHA loan right after a Chapter 13 Bankruptcy discharge without any waiting period. Consumers who filed for Chapter 7 Bankruptcy should start re-establishing their credit as soon as possible after their Chapter 7 Bankruptcy. Secured Credit Cards To Re-Establish Credit is the fastest and easiest way of re-establishing credit after Chapter 7 Bankruptcy.
FHA Bankruptcy Waiting Periods After Chapter 7
There is a two year mandatory waiting period to qualify for a FHA insured mortgage loan after the discharged date of a Chapter 7 Bankruptcy. Just passing the mandatory waiting period after the Chapter 7 Bankruptcy does not automatically guarantee a FHA Loan approval. The minimum credit scores required to qualify for a 3.5% down payment FHA loan after Chapter 7 Bankruptcy is 580 credit score.
Mortgage lenders want to see that mortgage loan borrowers have re-established credit after Chapter 7 Bankruptcy with no late payments.
Borrowers can qualify for an FHA loan with credit scores down to 500 FICO. However, credit scores under 580 require a 10% down payment. Any mortgage loan borrowers with credit scores under 620, the Automated Underwriting System will request verification of rent. Verification of Rent is only valid if the renter can provide 12 months canceled checks or bank statements if the rental payments were done online.
Qualify for a FHA insured mortgage loan after chapter 7 bankruptcy
FHA Bankruptcy Waiting Periods After Chapter 13
Homebuyers can qualify for a FHA loan with one year into their Chapter 13 Bankruptcy with the approval of their Chapter 13 Bankruptcy Trustee. All payments into their Chapter 13 Bankruptcy must have been paid on time with no late payments in the past 12 months. Homebuyers cannot qualify for a FHA loan with late payments on Chapter 13 Bankruptcy repayment plan.
Homebuyers with a Chapter 13 Bankruptcy discharge that has been seasoned less than 2 years require that the mortgage loan file be manually underwriting.
If the renter is leasing their apartment or home from a registered property management company. Homebuyers with prior bankruptcies can now qualify for a FHA Loan after meeting the mandatory waiting periods and no late payments after bankruptcy. Homebuyers who just had a Chapter 13 Bankruptcy discharge and are told they do not qualify for a FHA loan, please do not hesitate to contact me at 800-900-8569 or text us for a faster response. Can also email us at gcho@gustancho.com. We are FHA approved mortgage lenders with no investor overlays on FHA loans. Gustan Cho Associates specializes in helping home buyers who had prior bankruptcies qualify for FHA loans.
