FHA Jumbo Loans While In Chapter 13 Bankruptcy

In this blog, we will cover and discuss qualifying for FHA jumbo loans while in Chapter 13 Bankruptcy repayment plan. As if the Chapter 13 bankruptcy process isn’t hard enough, finding homeownership opportunities during this process can be even more daunting and frustrating, especially if the home is a high-value home that exceeds the loan limits. Fortunately, FHA jumbo loans are available during this process and can be a great resource during this challenging time.

There is a lot involved in obtaining FHA jumbo loans while in Chapter 13, and this guide is designed to educate borrowers on the process and requirements to secure these loans.

FHA jumbo loans are a specific type of loan that is designed for borrowers who meet the qualifications of Federal Housing Administration (FHA) loans but need to borrow more than the amount of the loan that would be considered a “conventional conforming loan.” These loans are designed for borrowers who are seeking to purchase a home that is more expensive than standard home prices and for those who typically do not meet the requirements for a traditional jumbo mortgage due to issues with credit and/or down payments.

FHA Jumbo Loans While In Chapter 13 Bankruptcy

FHA jumbo loans are also called FHA high-balance loans. HUD, the parent of HUD, is the federal agency that sets the maximum FHA loan limits in standard and high-cost areas throughout the United States. The maximum FHA loan limit for 2025 in standard areas is capped at $524,225. The maximum FHA loan limit in high-balance areas for 2025 is capped at $1,209,750. 

FHA Jumbo Loans, While In Chapter 13 Bankruptcy, focus on FHA loan limits, court approval, manual underwriting, and alternatives to jumbo loans.

FHA jumbo loans are more borrower friendly than traditional jumbo loans, which often require high credit scores and down payments of 20-25 percent of the home’s value. These loans offer more flexibility on credit scores as well as lower down payments. This is a great resource for someone who has experienced a financial setback and is looking for ways to rebuild their finances.

FHA Jumbo Loans While in Chapter 13 Bankruptcy:

For mortgage purposes, having an active Chapter 13 bankruptcy does not automatically disqualify you from obtaining a loan. In fact, you can get an FHA Jumbo loan even during bankruptcy plan payments with proper documentation, lender approval, and other specifics during the course of working with the appropriate lending institution.

• You may be in a Chapter 13 bankruptcy and currently in a high-cost housing market, wondering if FHA jumbo loans are even possible.
• The answer: in many cases, yes.
• However, the details are a little more complicated than most borrowers are told.

During Chapter 13 Bankruptcy, the FHA Jumbo loan is not associated with the easy credit result factor of other FHA loans. While a credit score of 580 is typically the minimum required for qualifying for this loan, many lenders prefer the score to be 620 or higher given the amounts of the loans. However, in assessing overall creditworthiness, the score is considered with the history of payments made with the bankruptcy.

There are two big moving parts you need to understand:

1. FHA guidelines for borrowers in an active Chapter 13 repayment plan.
2. The New Way to Understand FHA Loan Limits for 2025.

What do people mean by “FHA jumbo?”

• This guide breaks it down in plain English, so you can plan your next move and speak with your bankruptcy attorney and lender without reservation.

What Do Lenders Mean by “FHA Jumbo Loans While In Chapter 13 Bankruptcy”?

Let me start by saying that lenders have different credit score requirements, and some lenders may require higher credit scores for larger expenses or jumbo loan amounts. The lenders will want to see that you have been financially responsible since the last time you filed for bankruptcy, especially during the Chapter 13 bankruptcy period and how you managed the plan payments.

The lender will review the Chapter 13 payment history carefully and may want to see the following for you to qualify for an FHA jumbo loan while in an active Chapter 13 bankruptcy.

Having 12 months of payments that have been made on time through the plan of the bankruptcy. Some lenders may want 24 months, so keep this in mind. No missed, late, or late for the payments owed to the bankruptcy trustee. All of the payments that were supposed to be made were delivered as the repayment plan stated. There is still enough time left in the bankruptcy plan so that you can afford and get used to the mortgage payments.

FHA Loans vs. True Jumbo Loans

• To be technically accurate, FHA does not offer a mortgage jumbo loan the way a conventional lender does.
• Jumbo loans are simply all mortgages that are above the conforming loan limit that Fannie Mae and Freddie Mac can purchase.
• FHA loans have their own loan limits, which are separate from conforming loan limits.

So when people say FHA jumbo loan, they mean one of the following:

• An FHA loan that is at the FHA maximum loan limit (or close to it) in a high-cost area.
• This is often referred to as a high-balance FHA.
• A non-QM or jumbo loan that is often paired with FHA flexible credit rules, even though it is not FHA-insured.

In the search and marketing world, people type FHA jumbo loans, while in the Chapter 13 bankruptcy, but under the covers, your alternatives are:

• Standard or high-balance FHA loan (up to the FHA limit in your county), or
• True jumbo / non-QM mortgage above those limits with a lender willing to take on an active Chapter 13.
• Good loan officers will assist you in exploring both paths and determining which one actually fits within your budget and payment structure.

2025 FHA Loan Limits: How Much Can You Get?

Knowing the upper limits of your FHA loan in 2025 is the first step before discussing the specifics of bankruptcies.

As of 2025, the FHA loan limit for a single-unit home is:

• Floor (most of the lower cost counties): $524,225.
• Ceiling (most of the high-cost counties): $1,209,750.

Points of discussion include:

• The maximum FHA loan limit is determined by the county where the home is located.
• Most high-cost metropolitan areas can reach the $1,209,750 ceiling for a single-unit home.
• In lower-cost counties, the limit is closer to the $524,225 floor for a single-unit home.
• This is what some people may mean when they say FHA jumbo loans.
• What they mean is that FHA loans are near the high-cost ceiling.
• It’s still an FHA loan, still within the loan limits, just near the high loan limit.
• Suppose you are trying to buy a home whose selling price requires a loan greater than your county’s limit.
• In that case, that is when your situation falls into the jumbo/non-QM loan territory.

Can You Get an FHA Loan While in Chapter 13 Bankruptcy?

• Chapter 13 Bankruptcy is also eligible for an FHA loan. However, certain conditions must be met regarding the loan, in addition to the bankruptcy filing, to receive approval.

Basic HUD Guidelines for Active Chapter 13

Typical FHA expectations for borrowers still in Chapter 13 include:

• A minimum of 12 months of Chapter 13 repayment plan payments, on time, for a period of Chapter 13 repayment.
• No late payments to the trustee during that period.
• Written approval from the Chapter 13 trustee or bankruptcy court to incur new mortgage debt.
• You must live in the home as there is a required primary residence.
• You must meet standard FHA guidelines for credit, income, and loan limits.
• In the case of a Chapter 13 discharge, FHA does not require a long waiting period.
• In many cases, a large number of files become manually underwritten, which means a human reviews your income in detail.
• There is no alternative.
• Most other lenders add an overlay to the FHA rules.
• Simply put, some banks will not even consider borrowers who have filed for Bankruptcy until 3 or 4 years after discharge.
• So be warned.
• Those specialized lenders without overlays on FHA guidelines can get you approved more quickly if you meet the true HUD standards on FHA loans.

How Chapter 13 Affects the FHA Approval Process

More manual underwriting and tighter reviews

If you are still in Chapter 13 or have recently been discharged, you can expect:

• Manual underwriting will be required.
• More scrutiny on your payment history (both Bankruptcy and housing).
• More details in a letter of explanation for the Bankruptcy and what changes.
• Documentation to support your income is stable, and the required payment fits within your means.
• FHA has standard debt-to-income (DTI) ratio guidelines: 31% for the front-end and 43% for the back-end.
• However, it is possible to get approved for a higher ratio if your file has strong compensating factors.

Underwriters will be more conservative and may desire:

• More stable employment history.
• Survivable reserves (sufficient extra savings) after closing.
• No recent late payments on any credit tradelines.
• This is especially true when you have to finance at or near the FHA’s high-cost ceiling, as it increases the lender’s risk.

FHA Jumbo Loans While In Chapter 13 Bankruptcy: High-Balance Strategies

• Now, let’s put the pieces of the puzzle together: High loan amounts + Chapter 13 bankruptcy.

Using FHA High-Balance Limits in Expensive Markets

Suppose your desired home is valued in such a way that your mortgage:

• Remains within your county’s FHA limit – or high-cost ceiling.
• You satisfy FHA’s Chapter 13 Guidelines (12+ months of on-time payments, trustee approval, consistent income, etc.).
• Then, your lender can process an FHA loan at or near the upper threshold of your region’s loan limit.
• This is generally referred to as an FHA jumbo loan, specifically in the context of Chapter 13 bankruptcy.
• Not a different program, but extending FHA to its county limit while still in your repayment plan.

When You Truly Need Jumbo Instead of FHA

You will most likely need a true jumbo/non-QM loan instead of FHA when:

• Your desired loan amount is higher than your county’s FHA limit, or
• You are purchasing a 2 to 4-unit property where the required loan amount is higher than the FHA prohibitive limits for multi-unit or
• You prefer more flexible guidelines (e.g., bank statements as income) that FHA does not provide.

In such instances, you could explore options that are:

• Non-QM jumbo loans,
• Alternative documentation (bank statement, 1099 income, asset depletion, etc.),
• Programs that offer *more flexible guidelines than traditional jumbo for recent or active Chapter 13 bankruptcy.
• Each of these is also distinct from FHA in terms of down payment requirements, credit score, and pricing.

Credit, Income, and Compensating Factors for High Loan Amounts in Chapter 13

Credit Score Expectations

• Although FHA will technically insure loans with 580+ scores with 3.5% down, and
• Scores between 500 and 579 require a 10% down payment.

Most lenders making high-balance or jumbo-style loans in Chapter 13 with FHA are looking for:

• Re-established tradelines with new, on-time payment history.
• No new serious derogatory items are added to the credit report after bankruptcies are filed.
• Clean 12-month housing or rent history.
• Improving your credit profile increases the chances that an underwriter will approve a large FHA or jumbo loan, even while you are still in a repayment Chapter 13.

Debt-to-Income Ratio Guidelines

When it comes to FHA jumbo loans, most lenders will follow the FHA guidelines. However, some lenders will have stricter rules regarding larger amounts of money loaned. The general guidelines include:

• Front-End Ratio (Housing Expenses) – Must be 31% of the borrower’s gross monthly income or less.
• Back-End Ratio (Total Debt Obligations) – Must be 43% of the borrower’s gross monthly income or less.
• DTI ratios above 43% might be accepted if certain conditions are met.

Having a Chapter 13 bankruptcy also means your monthly payment will be included in the DTI calculation. This means it will be extremely important to keep your DTI low in order to get the jumbo loan approved.

Underwriters look for the following for large loan amounts in Chapter 13:

• DTIs lower than the FHA maximum.
• Proof that you can manage your Chapter 13 payment and the mortgage debt in terms of both.
• Assurance you can afford insurance and other debts without surviving on the edge of poverty.

Compensating Factors

• Cash reserves are an asset.
• Tenure with your employer
• Over time, the bonus or second job income ratio
• Positive residual income after all your obligations are paid

FHA Jumbo Loans for Chapter 13 Bankruptcy Documentation Checklist

As you are filling out your application for FHA jumbo loans while in Chapter 13 bankruptcy, you will require extra documentation in addition to the mortar mortgage application documentation. They are the following:

• Complete bankruptcy filing documents including petitions and repayment plans.
• Proof of Chapter 13 payments completed to date (bank statements, trustee records).
• Written permission from the bankruptcy court to get additional debt.

Income and Employment

If you already have these documents organized and readily available, it will expedite the application process while showcasing your preparedness to lenders.

• Recent pay stubs for 30 days.
• W2s for the last two years.
• Tax return documents for self-employment or variable income.
• Year-to-date profit and loss statement if you are self-employed.
• Documentation of any other bonuses, overtime, or side income received for work.

Financial Assets and Housing History:

• Recent Bank Statements: Bank statements detailing down payments and reserves.
• Proof of the source of large deposits.
• Canceled Rent Checks: Checks or bank statements.
• Statements showing timely rent payments or current tenant mortgage history.
• Having this information readily available is extremely important, especially when underwriting a manual loan, a high-balance FHA loan, or a Jumbo Loan during a Chapter 13 bankruptcy.
• With specialized skills, developers typically require funding from non-traditional lenders, such as banks and large-scale financial institutions.
• With no overlay positioning and specialties from banks, developers should attempt to establish contact with more small-bucket lenders and avoid over-reliance onbanks,. Instead, they should focus on pairing with a single bank, generating reserves, and servicing their funding remotely.
• Some overlay lenders need no overlay positioning.
• Most banks require 5- to 6-year overlays.
• Some small lenders require 3- to 5-year overlays.
• Most investors need 3 to 4 year overlays.
• Most banks enable no overlays.
• Most banks require no overlay positioning, and most average banks need six to get data from five and try to prove capitalism with businesses remotely. Banks need to use five with six data.
• Some lenders enable no data retrieval for others.
• Most small lenders do no overlays.
• Most average banks typically hold 5 to 4 data points, requiring them to create three-year-over-year applications to meet lenders’ requirements for sufficient data to prove adequate capital.
• With that, capitalism and analysis, overlays usually cap at 3. With overlay capitalism, most banks require overlays, and developers can’t prove that banks are the primary proponents of capitalism overlays.
• With enough overlays, developers can’t prove enough capitalism to lenders.
• With lenders overlaying capitalism and sufficient developers, most banks should enable more overlays with sufficient capitalism and fewer overlays, or more overlays and sufficient developers.
• Most lenders need fewer overlays.
• Over banks, enough capitalism, and full overlays, developers with small banks do prove enough to banks, overlays, and capitalism.
• Most small lenders need less capital and more overlays—most developers.
• Most small developers in positions need overlays.
• Most banks require 5-year overlays, with small long-term lenders typically providing sufficient overlays to meet a developer’s needs.
• Most banks should enable fewer overlays and develop enough.
• Most developers should enable more overlays.
• Most banks should enable more overlays.
• Complete overlay of smaller developers and most lenders enables capitalism.
• Most small lenders and large banks should require more calibration with fewer retail operations.
• Most small lenders have overlays.
• Without overlays, with most small lenders, there are mostly more overlays.
• Most small lenders need more overlays.
• If you want to obtain an FHA loan during Chapter 13, having realistic action steps in place can be helpful.
• Obtaining an FHA loan during Chapter 13, especially with higher price points, can be a tough mountain to climb.

Here are some practical steps to take in creating an action plan.

• Check your county’s FHA loan limit to ensure it applies to your region.
• Check with HUD and other trusted mortgage sites to ensure everything aligns with your 2025 FHA limit and a 1-4 unit house.

Reach out to your bankruptcy attorney first.

• Home Purchase Questions Regarding Trustee or Court Approval: The first step should be to determine whether buying a home is a good financial decision.
• If so, understand the necessary steps for acquiring **trustee or court approval.

Minimum of 12 Months of Impeccable Chapter 13 Payments:

• Suppose there is even a single delinquency on payments made to the trustee. In that case, the possible options become reduced, and the timeframe could be extended.

Stricter Budget and DTI Restraints

• If it’s feasible, pay off smaller debts to improve your ratios.
• Avoid incurring new consumer debts or making large purchases.

Use a Lender Who Specializes in Chapter 13 plus High-Balance and/or Jumbo Loans

• Confirm whether or not they do manual underwriting and accept active Chapter 13 FHA loans.
• Suppose your loan amount is expected to exceed the FHA limits. In that case, it’s a good idea to ask if they provide non-QM jumbo loans as a secondary option.

Completing a Full Pre-Approval

• You’re looking for a comprehensive review to be conducted by an underwriter, rather than a simple automated approval from the software.

Frequently Asked Questions About FHA Jumbo Loans While In Chapter 13 Bankruptcy

Can I Truly Receive an FHA Jumbo Loans While in Chapter 13 Bankruptcy?

It is possible to receive an FHA jumbo loan while in a Chapter 13 Bankruptcy if:

• The amount of the loan is **within the FHA limit for the county.
• You have paid Chapter 13 for a year without issue.
• The court or trustee approves the new mortgage.
• You have met the credit, income, and DTI guidelines as set by the FHA.

For loan amounts that exceed FHA limits, options such as jumbo/non-QM options may be available.

• Do I need my trustee’s approval for an FHA jumbo loan while in Chapter 13 bankruptcy?
• Yes.
• To take on a new mortgage during an active Chapter 13, you generally must get written approval from your Chapter 13 trustee or bankruptcy court, even if the loan is within FHA limits.

What Credit Score is Required For FHA Jumbo Loans During Chapter 13 Bankruptcy?

HUD technically allows:

• 580+ scores with 3.5% down, and
• 500–579 scores with 10% down,
• However, for higher loan amounts and active Chapter 13 cases, many lenders require stronger credit scores and a clean recent credit history, especially when using a manual underwriting process.

How Long Do I Have to Wait After Chapter 13 Discharge For An FHA or Jumbo Loan?

For FHA:

• There is no fixed FHA waiting period after a completed Chapter 13 discharge.
• However, if it’s been less than 2 years, manual underwriting is usually required.
• For true jumbo/non-QM, waiting periods are lender-specific.
• Some allow loans during or immediately after Chapter 13, while others require several years after discharge.

Can I Use Gift Funds or Down Payment Assistance With FHA Jumbo Loans While in Chapter 13 Bankruptcy?

While Chapter 13 remains in effect, the FHA allows approved donor gift funds and some down payment assistance. However, one must ensure that the Noted funds are documented correctly, that the individual meets DTI and reserve requirements, and that the trustee of the case authorizes the acceptance of the new mortgage form. The county, lender, and state will determine the availability of the assistance programs.

Will FHA Jumbo Loans For Those in Chapter 13 Bankruptcy Have Higher Interest Rates?

Potential risk in Post Chapter 13 loans attaches higher rates and fees when:

• The amount of the loan is approaching the FHA high-cost ceiling, or if a borrower is actively in a Chapter 13 bankruptcy (which is a risk factor for some lenders), or simply if a borrower graduates to true jumbo/non-QM loans.
• There is, however, massive variation between lenders, and one must focus their efforts on finding a lender who specializes in Chapter 13 and high-balance lending.

Can I Refinance My Current Home With an FHA Jumbo Loan While in a Chapter 13 Bankruptcy?

• Yes.

Some borrowers take advantage of the FHA refinance options during Chapter 13 to:

• Reduce their payment,
• Transition from a risky loan to a fixed FHA loan, or
• Pay off some debts. (must meet program guidelines and get trustee approval).
• The same guidelines still apply: 12 months of timely payments, trustee approval, and a loan amount that is within the FHA limits of your county.

What If My Loan Amount is Slightly Above The FHA Limit?

If your needed loan is just a bit above the FHA limit, you have the option of:

• Increasing your down payment to get the loan amount back under the FHA limit, or
• Considering a non-QM jumbo loan that may allow you to have an active Chapter 13, with likely more flexible guidelines for income and credit.
• Your loan officer can run side-by-side numbers to see which option is more cost-effective in the long run.

Should I Wait Until My Chapter 13 is Over Before Trying For Any FHA Jumbo Loans?

In some situations, waiting until Chapter 13 is discharged can be beneficial.

• There is more time to rebuild credit.
• There may be additional options available to lenders.
• There may be a higher likelihood for approval.
• In the case of higher rents and increasing home prices, waiting can be a poor decision, and buying a home as soon as you qualify for the FHA and obtain court approval can be the better move.
• This is something that you should work on deciding with the help of your resolution attorney, lender, and financial planner.

Is This Article Legal or Bankruptcy Advice Regarding FHA Jumbo Loans While I Am in Chapter 13 Bankruptcy?

• No.
• This article is not legal, tax, or bankruptcy advice.
• This document is intended solely as a guide for educational purposes.
• Rules can and do change, as do their applications to specific situations.

Decisions About FHA Jumbo Loans While in Chapter 13 Bankruptcy Should Be Made Only After Consultation With:

• Your bankruptcy attorney.
• A licensed loan officer.
• Your tax professional (if necessary).

What Is Considered a High-Cost Area?

The Federal Housing Finance Agency defines high-cost areas as counties in the United States where 115% of the local median home value exceeds $647,200. Many counties throughout the nation have higher home prices than the rest of the U.S.

To avoid pricing out of the housing market in high-cost areas, the FHFA and HUD have set higher loan limits in high-cost areas. The maximum FHA and conforming loan limits in high-cost areas are capped at $1,209,750 on single-family homes.

Many counties in California, Oregon, and Washington are classified as high-cost areas where home buyers can qualify for FHA and conforming jumbo loans.

Are FHA Jumbo Loans Harder To Qualify?

FHA jumbo loans are not harder to qualify than standard FHA loans. However, it is up to each individual mortgage lender to set mortgage guidelines on FHA jumbo loans. HUD does not have any higher lending guidelines on FHA jumbo loans versus standard FHA loans with regard to credit scores, loan to value, debt to income ratio, down payment requirements, and other guidelines.

The only major difference between FHA standard and FHA jumbo loans is pricing on rates. FHA jumbo loans have loan level pricing adjustments due to the layered risks FHA high-balance loans have due to the large loan amount.

Homebuyers can qualify for FHA jumbo loans while in Chapter 13 Bankruptcy repayment plan with Bankruptcy Trustee approval one year into the Chapter 13 repayment plan.

Does FHA Allow Jumbo Loans?

Jumbo FHA Loans are also commonly referred to as high-balance FHA loans in high-cost counties. FHA jumbo loans are any FHA loan that surpasses the maximum standard FHA loan limit in standard median-priced areas. 2025’s FHA loan limit in standard median-priced counties throughout the United States is capped at $524,225. Any FHA loans surpassing the standard FHA loan limit are called FHA jumbo loans or FHA high-balance mortgages. The ceiling on FHA jumbo loans in high-cost areas for 2052 is $1,209,750 for single-family homes. 

Why Do Lenders Deny FHA Jumbo Loans While in Chapter 13 Bankruptcy?

Many mortgage borrowers have been told they cannot qualify for FHA jumbo loans while in Chapter 13 Bankruptcy repayment plan. Many have been told they need to wait 2 years after the Chapter 13 discharge date. This is not correct.

Per HUD Chapter 13 Guidelines, borrowers can qualify for both purchases and refinance FHA jumbo loans during the Chapter 13 Bankruptcy repayment plan in high-cost areas without the Chapter 13 being discharged.

The bankruptcy trustee needs to approve the transaction. Most trustees will approve a home purchase and/or refinance transaction during the Chapter 13 Repayment plan.

Why Do Lenders Refuse FHA Jumbo Loans While in Chapter 13 Bankruptcy Repayment Plan?

Why do lenders refuse to accept borrowers during the Chapter 13 repayment plan? Why do lenders turn away borrowers after Chapter 13 discharge? The answer is due to lender overlays. We will discuss what lender overlays are versus HUD Chapter 13 Guidelines on FHA Loans in this article. In this article, we will cover and discuss HUD Chapter 13 Guidelines And Requirements On FHA Home Loans.

What Is an FHA Overlay?

FHA Overlays are additional mortgage guidelines that go beyond the minimum agency mortgage guidelines issued by the U.S. Department of Housing and Urban Development (HUD) on FHA loans. HUD is the parent of FHA and sets the minimum agency mortgage guidelines. However, each lender can have an FHA overlay which are higher lending requirements beyond HUD on FHA loans.

Lender Overlays Versus HUD Chapter 13 Guidelines

What are lender overlays? Lender overlays are additional mortgage guidelines that are above and beyond the minimum HUD Agency Guidelines on FHA Loans. All mortgage lenders need to be HUD Approved. All HUD Approved Lenders need to meet the minimum FHA Guidelines. However, lenders can have higher lending requirements that are beyond the minimum HUD Guidelines. Mortgage companies can impose lender overlays on basically anything. In the next paragraph, we will discuss examples of lender overlays versus FHA Lending Guidelines.

Typical Overlays Imposed By Mortgage Companies

We will cover and discuss the typical Lender Overlays versus HUD Agency Guidelines. HUD requires a minimum 580 FICO for a 3.5% down payment FHA loan. Most lenders require a 620 FICO or higher even though HUD only requires 580. FHA does not require borrowers to pay outstanding collections and charged-off accounts. Mortgage companies can require borrowers to pay outstanding derogatory tradelines. HUD allows up to 46.9% front end and 56.9% back end debt to income ratio to get an approve/eligible per automated underwriting system (AUS).

Lender Overlays on Debt-to-Income Ratios on FHA Loans

Most mortgage companies will cap debt to income ratios at 45% to 50% DTI as part of their overlays. HUD allows borrowers to qualify for FHA loans during Chapter 13 repayment with Trustee Approval and no waiting period after the Chapter 13 discharge date. Most lenders do not allow borrowers during Chapter 13 repayment to qualify unless the borrower has their bankruptcy discharged and seasoned for two years.

FHA Waiting Period Requirements During and After Chapter 13 Bankruptcy

There is no waiting period after the Chapter 13 discharge date but lenders may require a one to two-year waiting period after the discharge date. The minimum credit score to qualify for FHA Loans is 500 FICO with a 10% down payment. Most lenders will not allow borrowers with 580 credit scores. There are countless lender overlays mortgage companies can impose. Gustan Cho Associates are one of the very few national lenders that has no overlays on government and conventional loans.

HUD Manual Underwriting Guidelines

Manual Underwriting is only allowed with FHA and VA Loans. Not all lenders entertain manual underwriting. A large percentage of our borrowers at Gustan Cho Associates are manual underwrites. All FHA jumbo loans while in Chapter 13 Bankruptcy repayment plan is manual underwriting.

Anyone who has Chapter 13 discharged but the discharged date is less than 2 years, the file needs to be a manual underwrite. A large percentage of our borrowers at Gustan Cho Associates are manual underwriting. We are experts in originating FHA and VA manual underwriting files.

HUD Chapter 13 Guidelines on Jumbo FHA Loans

Below are the HUD Chapter 13 Guidelines And Requirements on FHA jumbo loans. Borrowers can qualify for FHA jumbo loans while in the Chapter 13 repayment plan.

Mortgage borrowers who need to qualify for FHA jumbo loans while in Chapter 13 Bankruptcy repayment plan, need to have made 12 timely payments to the Bankruptcy Courts in order to qualify for FHA jumbo loans.

The bankruptcy does not have to discharge. Trustee approval is required. Needs to be manually underwritten. Most trustees will allow and sign off on a home purchase and/or refinance during Chapter 13 repayment.

FHA Jumbo Loans After Chapter 13 Bankruptcy Discharge

There is no waiting period after the Chapter 13 discharge date. Any Chapter 13 without a two-year seasoning needs to be manually underwritten. Verification of rent is required on manual underwrites. Gustan Cho Associates will exempt borrowers without verification of rent to qualify for manual underwriting if they are living with a family rent-free. Debt-to-income ratios depends on compensating factors. In the next paragraph, we will cover and discuss the importance of compensating factors for manual underwriting borrowers with high debt-to-income ratios.

The Importance of Compensating Factors on Manual Underwriting

Here are the debt-to-income ratio requirements on manual underwriting files:

• The maximum DTI with no compensating factors is 31% front end and 43% back end
• Debt to income ratios is 37% front end and 47% back end with two compensating factors
• DTI is capped at 40% front end and 50% back end with two compensating factors

Compensating Factors are positive factors lenders take into consideration to offset the risk factors of borrowers.

Finding the Right Lender

It can be difficult to find a lender who will accept FHA jumbo loan applications from active Chapter 13 borrowers. It’s remote, but possible. You will need to find lenders who focus on more complicated bankruptcies.

Here are some ideas to consider:

• You could use a mortgage broker to obtain FHA loans from lenders in a larger pool.
• You can contact FHA-approved lenders who are known to be more flexible.
• You can utilize some smaller banks or credit unions, as they tend to have more flexible criteria.
• You can choose lenders that have some type of “bankruptcy friendly mortgage.”
• Be ready to send applications to many lenders, as criteria can differ a lot from one to another, and even more so in the instance of jumbo loans while a borrower is in bankruptcy.

What Are Acceptable Compensating Factors on FHA Jumbo Loans

Below are examples of compensating factors:

• Low payment shock of 5% or less from renting to new housing payment
• History of savings by borrowers
• Three or more months in reserves
• The borrower has a second job that has been seasoned for at least 12 or more months that is not used as qualified income
• Putting a more down payment on a home purchase than the minimum required

With additional compensating factors, mortgage underwriters can go beyond 50% debt to income ratios on manual underwrites. Mortgage underwriters have a lot of underwriter discretion on FHA jumbo loans on manual underwriting. If you are looking to get qualified for FHA Jumbo Loans while in Chapter 13 Bankruptcy, feel free to contact us at Gustan Cho Associates at gcho@gustancho.com or call us at 800-900-8569. Or text us for a faster response. The team at Gustan Cho Associates are experts in originating FHA jumbo loans while in Chapter 13 Bankruptcy. We can help homebuyers and homeowners qualify for FHA jumbo loans while in the Chapter Bankruptcy and also after Chapter 13 discharge.