FHA Chapter 13 Bankruptcy Guidelines To Qualify For Mortgage

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FHA Chapter 13 Bankruptcy Guidelines allow homebuyers and homeowners to qualify for FHA loans for home purchases and refinance during and after Chapter 13 Bankruptcy. FHA and VA loans are the only two mortgage loan programs that allow borrowers to qualify for a mortgage during the Chapter 13 Bankruptcy repayment plan without the Chapter 13 Bankruptcy getting discharged. VA and FHA Chapter 13 Bankruptcy Guidelines are almost identical. VA and FHA loans are the only two loan programs that allow manual underwriting.

Do You Meet The VA and/or FHA Chapter 13 Bankruptcy Guidelines?

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Comparisons Of VA and FHA Chapter 13 Bankruptcy Guidelines

Borrowers can qualify for a mortgage for an FHA and VA loan during the Chapter 13 Bankruptcy repayment plan. This holds true for both home purchase and refinances transactions. However, borrowers qualifying for an FHA or VA loan during a Chapter 13 Bankruptcy repayment plan need to be a manual underwrite. In this article, we will cover the following topics:

  • Qualifying for an FHA and VA loan during Chapter 13 Bankruptcy Repayment plan
  • Eligibility Requirements to qualify for a mortgage during Chapter 13 Bankruptcy repayment plan
  • Does Chapter 13 Bankruptcy need to be discharged?

VA and FHA Chapter 13 Bankruptcy Guidelines are almost identical. The only difference is VA loans are more lenient than FHA Chapter 13 Bankruptcy Guidelines.

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Chapter 13 Bankruptcy Guidelines on FHA and VA Home Loans

Both the VA and FHA Chapter 13 Bankruptcy  Guidelines are very similar. Many home buyers who are either in the Chapter 13 Bankruptcy Plan or just had a discharge are often confused when they consult with lenders to see if they qualify for VA and/or FHA loans. One of the most often questions I get from my borrowers is the different types of answers they get from lenders who they consult during the waiting period.

Do All Lenders Have Different Guidelines on The Same Mortgage Program?

The answer to all lenders a have different guidelines on the same mortgage program is YES. All mortgage lenders need to meet the minimum agency guidelines on FHA, VA, USDA, and conventional loans, but most lenders have their own internal lender overlays that are higher than the minimum agency guidelines. These higher lending agency guidelines are called lender overlays. One lender may require a 640 FICO on a VA loan and another may require a 580 FICO. However, VA does not have a minimum credit score requirement. Most lenders have overlays on government and conventional loans. Just because borrowers are told no by one lender does not mean they do not qualify with another lender with no mortgage overlays. They get different answers as of the waiting period during and after Chapter 13 Bankruptcy in qualifying for FHA and VA loans.

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Chapter 13 Bankruptcy Waiting Period Guidelines on FHA and VA Loans

Loan officers give these folks different answers. One lender may tell a borrower that there is a one-year waiting period to qualify for VA Loans and FHA Loan After Chapter 13 Bankruptcy. Another lender may say it is a two-year period after a Chapter 13 Bankruptcy discharged date to qualify. The true and real answer per VA and FHA Chapter 13 Bankruptcy Guidelines is that there is no waiting period to qualify for VA and FHA loans after the Chapter 13 Bankruptcy Discharge Date. Borrowers can qualify for FHA and VA loans during the Chapter 13 repayment period after one year into the Chapter 13 Bankruptcy repayment plan with trustee approval.

Manual Underwriting Guidelines on FHA and VA Loans?

Needs to be a manual underwrite if the Chapter 13 Bankruptcy discharge has not been seasoned for two years on VA and FHA loans. We will go into details on how a borrower can qualify for VA and FHA loans per VA and FHA Chapter Bankruptcy Guidelines on this BLOG. Will cover the mechanics of qualifying for VA and FHA loans for both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. A borrower can also qualify for VA and FHA loans one year into a Chapter 13 Bankruptcy Repayment Plan per VA and FHA Chapter Bankruptcy Guidelines. In the following paragraph, we will discuss and cover how to qualify for FHA Loans during and after Chapter 13 Bankruptcy.

Comparing Chapter 7 Versus Chapter 13 Bankruptcy Guidelines on FHA and VA Loans

Qualifying For FHA Loans After Chapter 7 Bankruptcy And Chapter 13 Bankruptcy

Under both VA and FHA Chapter 13 Bankruptcy Guidelines, the waiting period to qualify for an FHA loan after Chapter 7 Bankruptcy.is two years after the discharge date. VA and FHA loans after the Chapter 7 Bankruptcy discharged date require a two-year waiting period and an automated underwriting system approval. However, there is an exemption with qualifying for VA and FHA Loan After the Chapter 13 Bankruptcy Discharge date. The exception is there is NO WAITING PERIOD AFTER A CHAPTER 13 BANKRUPTCY DISCHARGED DATE. Needs to be a manual underwrite. Borrowers will not get an approve/eligible unless the Chapter 13 Bankruptcy discharged date has been seasoned for at least two years. That is why it needs to be manually underwritten. Remember that all manual underwrites need verification of rent.

Qualifying For FHA and VA Home Loans After Chapter 7 Bankruptcy

Here are the qualification requirements for qualifying for FHA  Guidelines Loan After Chapter 7 Bankruptcy. Borrowers can qualify for VA and FHA Loans two years after a Chapter 7 Bankruptcy discharge date. Here are the requirements for qualifying for VA and FHA loans after a Chapter 7 Bankruptcy discharged date.

  • Two years need to have elapsed from the discharge date of the Chapter 7 Bankruptcy discharge date.
  • The borrower must have re-established credit and timely payment history after the Chapter 7 Bankruptcy discharge to qualify for both VA and FHA Loans.
  • Late payments after a Chapter 7 Bankruptcy can trigger a loan denial.
  • Lenders will not qualify borrowers with late payments after bankruptcy and/or housing event.
  • Most lenders will not approve a borrower with any late payments after a Chapter 7 Bankruptcy discharge no matter how small the monthly payment may be.

Late Payments after bankruptcy and/or foreclosure are not automatic deal killers. There are cases where borrowers with late payments can qualify for an FHA Loan after late payments after the Chapter 7 Bankruptcy discharged date. Contact us at Gustan Cho Associates at 262-716-8151 or email at [email protected] if this is the case.

Qualifying For FHA and VA Loans During Chapter 13 Bankruptcy Repayment Period

FHA Chapter 13 Bankruptcy Guidelines state that a borrower can qualify for an FHA loan as long as they meet the following guidelines. It is the same with VA Home Loans. A borrower can qualify for VA and FHA loans one year into the Chapter 13 Bankruptcy Repayment Plan. Proof of payment needs to be provided to the mortgage lender. The bankruptcy Trustee needs to approve of mortgage loan if the borrower is into a Chapter 13 Bankruptcy Repayment Plan. All mortgages during the Chapter 13 repayment plan are manual underwrites. All manual underwrites require verification of rent. The borrower needs to have verification of rent where 12 months canceled checks for their rent and/or bank statements showing timely payment for their rental payment to the landlord. The good news with us at Gustan Cho Associates is we can waive rental verification if the borrower has been living rent-free with family to save money for their down payment on a home purchase.

Verification of Rent From Property Management Company

If the borrower is renting from a property management company, a VOR Form completed by the property manager is sufficient in lieu of canceled checks and/or 12 months’ bank statements. Verification of rent form is provided by a lender which the property manager of the property management company needs to complete sign, date, and stamp. All VA and FHA loans during and after Chapter 13 Bankruptcy discharge date are all manual underwriting and compensating factors are a must. One or more late payments during the Chapter 13 Bankruptcy Repayment Period can be an automatic disqualification.

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Best Mortgage Lenders For VA and FHA Loans During and After Chapter 13 Bankruptcy

What If I Do Not Have Verification Of Rent

VA and FHA Chapter 13 Bankruptcy Guidelines state there is no waiting period to qualify for VA and/or FHA koan after the Chapter 13 Bankruptcy discharged date. Many lenders who tell borrowers that there is a one-year waiting period or two-year waiting period to qualify for VA and FHA Loan after the Chapter 13 Bankruptcy discharge date are those who have Lender Overlays. Lenders can have additional stricter lending requirements called Overlays which are above and beyond the minimum FHA and VA guidelines.

Is It Possible To Purchase a House During Chapter 13 Bankruptcy?

FHA and VA loans are the only two mortgage loan programs that allow borrowers to qualify for home loans during the Chapter 13 Bankruptcy repayment plan 12 months after starting the plan. Home Buyers looking for a Lender with no lender overlays on government and conventional loans, contact Gustan Cho Associates at 262-716-8151. Or text us for a faster response. Or email Gustan Cho at [email protected] Gustan Cho Associates has a national reputation of no lender overlays on government and conventional loans. We also have dozens of non-QM wholesale lenders. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, on evenings, weekends, and holidays.

How Soon Can You Get a Mortgage After Filing Chapter 13 Bankruptcy?

Mortgage Guidelines During Chapter 13 Bankruptcy state borrowers can qualify for home loans during Chapter 13 Bankruptcy repayment plan. Borrowers can qualify for VA and FHA loans during the Chapter 13 Bankruptcy repayment period without the bankruptcy being discharged. They would need the approval of the bankruptcy trustee. VA and FHA Chapter 13 Bankruptcy guidelines are exactly the same. Borrowers need to be in the Chapter 13 Bankruptcy repayment plan for at least 12 months before they are eligible. 

Getting Bankruptcy Trustee Approval For A Mortgage

Most trustees will approve a home purchase during the Chapter 13 Bankruptcy repayment plan as long as the petitioner can afford the monthly housing payment. Of course, the home needs to be a regular home and not a mansion. The team at Gustan Cho Associates are experts in helping homebuyers qualify for FHA and VA loans during and/or after Chapter 13 Bankruptcy. Other loan programs do require a mandatory waiting period after the Chapter 13 Bankruptcy discharge date. Not all lenders will do manual underwriting.

Manual Underwriting Mortgage Guidelines During Chapter 13 Bankruptcy on FHA and VA Loans

FHA and VA loans are the only two mortgage loan programs that accept manual underwriting. Gustan Cho Associates are experts in the manual underwriting of FHA and VA loans. All borrowers who go through the mortgage loan process during Chapter 13 Bankruptcy on VA and FHA loans are under manual underwriting. Borrowers can qualify for an FHA and VA loan after Chapter 13 Bankruptcy discharge. If the Chapter 13 Bankruptcy discharge has not been seasoned for at least two years, the file needs to be a manual underwriting file. The main difference between manual and automated underwriting system approval is manual underwriting has lower debt-to-income ratio caps. Over one-third of our borrowers are folks either in an active Chapter 13 Bankruptcy repayment plan or had the Chapter 13 Bankruptcy recently discharged. In the following paragraphs, we will discuss and cover the mortgage guidelines during Chapter 13 Bankruptcy repayment plans on FHA and VA Loans.

What Are The Difference Between Manual Underwriting Versus Automated Underwriting System Approval?

FHA and VA loans are the only two mortgage loan programs that allow manual underwriting on home mortgages. All FHA and/or VA loans during the Chapter 13 Bankruptcy repayment period are manual underwrites. Any FHA and/or VA loans that have been discharged but have not been seasoned for two years are manual underwriting. Manual underwriting guidelines on FHA and VA loans are almost the same. However, lenders are more lenient on VA loans than they are on FHA loans on manual underwriting.

How Soon Can I Qualify For VA and FHA Loans After Chapter 13 Bankruptcy Discharge

FHA, VA, and Non-QM loans do not have any waiting period after the Chapter 13 Bankruptcy discharged date. Lenders expect borrowers to be timely payments on all their monthly debts after filing bankruptcy. Late payments during and/or after Chapter 13 Bankruptcy may be a deal-killer. This will depend on the lender. One or two late payments due to extenuating circumstances may not always be a deal killer. However, late payments during and/or after bankruptcy discharge due to the disregard of credit will most likely be a deal killer when it comes to qualifying for a mortgage.

VA and FHA Chapter 13 Bankruptcy Guidelines

What Are The FHA and VA DTI Guidelines During Chapter 13 Bankruptcy

The manual underwriting guidelines on FHA and VA loans are almost identical. This includes the debt-to-income ratio manual underwriting guidelines on FHA and VA loans. Mortgage Guidelines During Chapter 13 Bankruptcy verification of rent, late payment, and compensating factors on FHA and VA loans are very similar. Any Chapter 13 Bankruptcy that has not been seasoned for two years after the discharge date needs to be manually underwritten. We will discuss what manual underwriting is in this article. Therefore, any VA and/or FHA loans during the Chapter 13 Bankruptcy payment period need to be manually underwritten. FHA and VA loans are the only two mortgage programs that allow manual underwriting. Debt to income ratio guidelines on both FHA and VA loans are as follows: 31% front-end and 43% back-end with no compensating factors, 37% front-end and 47% back-end with one compensating factor, and 40% front-end and 50% back-end with two compensating factors.

FHA and VA Loan Eligibility Requirements While In Chapter 13 Bankruptcy

Here are the FHA and VA Chapter 13 Bankruptcy Mortgage Guidelines during an active repayment plan:

  • Homebuyers can qualify for a VA and/or FHA loan during the Chapter 13 Bankruptcy repayment plan without having the Chapter 13 discharged
  • In order to qualify, the borrower needs to be in the Chapter 13 repayment plan for at least one year
  • 12 months of timely payments to the Trustee are required
  • Trustee approval is required
  • Most trustees will sign off on a home mortgage
  • Both VA and FHA loans during an active Chapter 13 bankruptcy need to be manually underwritten
  • FHA requires a 3.5% down payment
  • VA offers 100% financing.
  • Verification of rent is required on manual underwriting.
  • If the borrower cannot provide verification of rent because they are living with family to save for the down payment, a letter of living rent-free needs to be completed and signed.
  • There is no waiting period after the Chapter 13 Bankruptcy discharge date on FHA and VA loans.
  • Any Chapter 13 Bankruptcy discharge that has not been seasoned for at least two years needs to be manually underwritten.

Gustan Cho Associates Mortgage Group are expert in helping borrowers qualify for FHA and VA loans during and after Chapter 13 Bankruptcy.

Fannie Mae Chapter 13 Bankruptcy Guidelines on Conventional Loans

Unlike FHA and VA loans, borrowers cannot qualify for conventional loans during the Chapter 13 Bankruptcy repayment period. To qualify for conventional loans after Chapter 13 Bankruptcy, the following mortgage guidelines apply. There is a four-year waiting period after the Chapter 13 Bankruptcy dismissal date. There is a two-year waiting period after the Chapter 13 Bankruptcy discharged date. There is a four-year waiting period after the Chapter 7 Bankruptcy discharged date. The team at Gustan Cho Associates are experts in helping homebuyers and homeowners qualify for a mortgage after bankruptcy. For more information about this article and/or other mortgage-related topics, please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected]

FHA Mortgage After Chapter 13 Bankruptcy Guidelines

Qualifying For FHA Mortgage During And After Chapter 13 Bankruptcy Is Possible At Gustan Cho Associates. Home Buyers can now qualify for FHA Mortgage After Chapter 13 Bankruptcy with no waiting period after the Chapter 13 Bankruptcy discharged date. I get many calls by borrowers who just got their Chapter 13 Bankruptcy discharged. The first place they to get qualified are banks, credit unions, and other lenders with overlays. They are often told that they do not qualify for an FHA Mortgage After Chapter 13 Bankruptcy until two years after the Chapter 13 Bankruptcy discharged date.

Chapter 13 Bankruptcy Mortgage Lenders

Gustan Cho Associates are experts in helping borrowers in Chapter 13 Bankruptcy repayment plan qualify for an FHA loan. A large percentage of our borrowers are folks who need manual underwriting during Chapter 13 Bankruptcy. Chapter 13 Bankruptcy does not need to be discharged. HUD Guidelines in qualifying for FHA Mortgage After Chapter 13 Bankruptcy are as follows:

  • states that there is no waiting period after the discharge date of a Chapter 13 Bankruptcy
  • borrowers can qualify for FHA Loans during their Chapter 13 Bankruptcy repayment plan with Trustee Approval
  • Trustees approve housing purchases and we have never had a Trustee not approve a home mortgage

HUD and VA Agency Guidelines Versus Overlays by Mortgage Lenders on Chapter 13 Bankruptcy 

Why are banks, credit unions, and most mortgage companies telling borrowers that they need to meet a two-year waiting period to qualify for FHA Loan After Chapter 13 Bankruptcy? This is because most banks have lender overlays when it comes to approving FHA Loan After Chapter 13 Bankruptcy. Many lenders do not do manual underwriting. Lender overlays are additional mortgage guidelines that are required in addition to the minimum FHA mortgage lending guidelines that are set by the individual banks, credit unions, and mortgage companies.

Lenders Can Have Higher Lending Requirements Above and Beyond FHA Chapter 13 Bankruptcy Guidelines 

Why are FHA Loans Without Two-Year Seasoning After Discharge Manual Underwriting

All mortgage loan applications are submitted to the Automated Underwriting System for automated approval. The Automated Underwriting System, also commonly referred to as AUS, will render three decisions:

  1. Approve/Eligible per Automated Finding
  2. Refer/Eligible per Automated Findings
  3. Refer/Ineligible per Automated Findings

Approve/Eligible per Automated Findings means that the mortgage loan applicant has a solid automated approval. Lenders like Gustan Cho Associates who do not have any investor overlays can close the FHA Loan. This will be contingent on the borrower meeting all of the conditions from the automated findings. 

The Automated Findings of the AUS

Refer/Eligible means that the borrower may or may not be eligible for an FHA loan. However, the automated underwriting system cannot determine an automated underwriting system approval and a human mortgage underwriter needs to be assigned to the file. Refer/Eligible means the file has a chance but cannot render an automated approval. The file needs to be manually underwritten by a mortgage underwriter. A refer with caution and/or /ineligible simply means the applicant does not qualify for one or many reasons and does not meet the FHA Chapter 13 Bankruptcy Guidelines.

Do You Meet The FHA Chapter 13 Bankruptcy Guidelines To Qualify For Mortgage? FIND OUT

FHA Chapter 13 Bankruptcy Guidelines on Automated AUS Approval Versus Manual Underwriting

Automated AUS Approval Versus Manual Underwriting

FHA Chapter 13 Bankruptcy Guidelines require all applications that have been seasoned for two years or less will render referred/eligible per Automated Underwriting System. All refer/eligible per AUS will require manual underwriting. However, many banks, credit unions, and mortgage companies are not set up to do manual underwriting. So most borrowers who consult with lenders who do not do manual underwriting often are told that they do not  meet the FHA Chapter 13 Bankruptcy Guidelines

FHA Chapter 13 Bankruptcy Guidelines To Qualify For FHA Loans

Homebuyers who have recently had a Chapter 13 Bankruptcy discharge and want to qualify for an FHA loan, please contact us at 262-716-8151. Text us for a faster response. Or email us at [email protected] Remember that HUD, the parent of FHA  allows homebuyers to qualify for FHA Loans during Chapter 13 Bankruptcy as well.  FHA Chapter 13 Bankruptcy Guidelines mandate borrowers need to have been in a Chapter 13 Repayment plan for at least 12 months. Per manual underwriting FHA Loans After Chapter 13 Bankruptcy Guidelines, the borrower needs to be timely in the past 24 months on all their monthly debt obligations. If you have any questions on FHA Loans After Chapter 13 Bankruptcy Guidelines, please contact us. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays to take your calls and answer all of your questions.

FHA Chapter 13 Bankruptcy Guidelines For Loan Approval

Other Requirements For Borrowers Applying For a Mortgage While in Chapter 13

All manual underwriting mortgage applications will require rental verification. Verification Of Rent is only valid if the renter has been paying their rental payments to their landlord with a bank check and can provide 12 months of canceled checks to the mortgage underwriter. The renter can also provide 12 months’ bank statements if the renter has paid their rental payments online. Rental payments cannot be late and need to have been timely in the past 12 months. If the renter has been renting their apartment or home from a registered property management company the following can be done. Then a VOR, Verification Of Rent, a form that is provided by the lender. Can be completed and signed by the property management representative. The VOR Form can be used in lieu of 12 months of canceled bank checks and/or 12 months of bank statements.

FHA Chapter 13 Bankruptcy Guidelines on Payment Shock

What If I Cannot Provide Verification Of Rent?

Borrowers who cannot provide verification of rent and are living rent-free with family do not need to provide rental verification. VOR can be waived on manual underwriting if the borrower is living rent-free with family members. The loan officer will provide a rent-free letter which needs to be signed by the person with who the borrower is living rent-free. Feel free to contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected]

Questions on FHA Chapter 13 Bankruptcy Guidelines?