In this article, we will discuss and cover qualifying for an FHA loan during Chapter 13 Bankruptcy in Arizona. Not all lenders in Arizona allow borrowers to qualify for an FHA loan during the Chapter 13 Bankruptcy repayment plan. Gustan Cho Associates has no overlays for borrowers to qualify for an FHA loan during Chapter 13 Bankruptcy in Arizona. Borrowers can qualify for an FHA loan during Chapter 13 Bankruptcy in Arizona one year into the repayment plan with trustee approval.
Borrowers can qualify for FHA Loan During Chapter 13 Bankruptcy in Arizona
There are two types of bankruptcy: Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 Bankruptcy is called total liquidation. Chapter 7 Bankruptcy is normally for consumers with little to no assets and no job or limited income from their jobs. Chapter 7 Bankruptcy normally takes 3 months for discharge from the filing date. Once Chapter 7 has been discharged, consumers are debt-free and can restart rebuilding their credit. The team at Gustan Cho Associates can help homebuyers rebuild their credit right after Chapter 7 Bankruptcy discharge. If you follow our advice at Gustan Cho Associates, you can have credit scores of over 700 FICO in less than a year. Qualify for FHA loan during chapter 13 bankruptcy in Arizona, click here
Chapter 13 Bankruptcy Repayment Process in Arizona
Chapter 13 Bankruptcy is for consumers who are fully employed and have assets. Chapter 13 Bankruptcy is a federal debt restructuring program. The U.S. Bankruptcy Courts will appoint a Trustee for someone who is filing Chapter 13 Bankruptcy. The trustee will allocate a certain percentage of the petitioner’s income and distribute those funds to creditors. Most Chapter 13 Bankruptcy has a repayment period of 60 months. After 60 months, the leftover debts are discharged by the Trustee and the consumer is debt-free.
FHA After Chapter 7 Versus FHA Loan During Chapter 13 Bankruptcy in Arizona
All lenders need to have their borrowers meet the minimum HUD Agency Lending Guidelines in order for the FHA loans they originate and fund to be insured by HUD. However, lenders can have additional lending guidelines that are above and beyond the minimum HUD Agency, Guidelines called lender overlays. It is not illegal for lenders to impose any lender overlays they like. They can require higher credit scores, lower DTI, outstanding collections to be paid off, and any other higher lending standards that are above and beyond those of the minimum agency guidelines on FHA loans.
Not All Lenders Have The Same FHA Loan During Chapter 13 Bankruptcy in Arizona Guidelines
Not all lenders have the same lending requirements on FHA loans. For example, to qualify for a 3.5% down payment FHA home purchase loan, the minimum HUD Agency Guidelines is 580 FICO. However, most lenders will require a 620 credit score or higher due to their lender overlays. This holds true even though HUD only requires a 580 credit score for a 3.5% down payment home purchase loan.
FHA Loans With 500 Credit Scores in Arizona
HUD allows borrowers with under 580 FICO and down to 500 credit scores to qualify for FHA loans. However, borrowers with under 580 credit scores require a 10% versus 3.5% down payment. This is HUD Agency Lending Guidelines. However, most lenders will not approve borrowers with credit scores down to 500 credit scores due to their lender overlays. However, Gustan Cho Associates has no lender overlays on FHA loans. We just go off HUD Mortgage Guidelines and have no additional lender overlays. Qualify for FHA loan with 500 credit scores, click here
HUD Guidelines on FHA Loans After Chapter 7 Bankruptcy in Arizona
Homebuyers can qualify for FHA loans two-years after Chapter 7 Bankruptcy discharged date. A prior bankruptcy does not affect the borrower’s mortgage rates. No late payments after the bankruptcy discharged date. Lenders do expect reestablished credit after bankruptcy discharged date. The team at Gustan Cho Associates can help borrowers reestablish their credit scores after the bankruptcy discharge date.
HUD Guidelines on FHA After Chapter 13 Discharge Versus FHA Loan During Chapter 13 Bankruptcy in Arizona
HUD allows homebuyers during Chapter 13 Bankruptcy repayment plan to be eligible for an FHA loan with Trustee approval and via manual underwriting. A bankruptcy trustee will almost always approve a home mortgage during the Chapter 13 Bankruptcy repayment period. We have never encountered a situation where a bankruptcy trustee did not approve a home mortgage during the repayment period.
How Soon Can Borrowers Qualify FHA Loan During Chapter 13 Bankruptcy in Arizona
Homebuyers can qualify for an FHA loan after being in the Chapter 13 Bankruptcy repayment period for 12 months. Timely payments are required. Any late payments either to the trustee or outside creditors may be a deal-breaker and make the borrower illegible. There is no waiting period after Chapter 13 Bankruptcy discharge date. However, any bankruptcy that has not been seasoned for 24 months after the discharged date needs to be a manual underwrite. Gustan Cho Associates are experts in manual underwriting and helping borrowers qualify for an FHA loan during and after Chapter 13 Bankruptcy.
Qualify for FHA loan during chapter 13 bankruptcy in Arizona, click here
Common Lender Overlays on FHA Loan During Chapter 13 Bankruptcy in Arizona
Not all lenders have the same lending guidelines on FHA loan during Chapter 13 Bankruptcy in Arizona. Even though borrowers can qualify for an FHA loan during Chapter 13 Bankruptcy and there is no waiting period after Chapter 13, many lenders will have lender overlays. Many lenders will not allow borrowers to qualify for an FHA loan during Chapter 13 Bankruptcy repayment period as part of their lender overlays. Many lenders will also require a one to two-year waiting period after Chapter 13 Bankruptcy discharge date. Gustan Cho Associates has no lender overlays on FHA loans. Gustan Cho Associates are experts in helping borrowers during Chapter 13 Bankruptcy repayment plan. We do not have any waiting period requirements after Chapter 13 Bankruptcy discharge date.
Qualifying For An FHA Loan During Chapter 13 Bankruptcy in Arizona
To qualify for an FHA loan after bankruptcy with a lender with no lender overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has no lender overlays on government and conventional loans. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
Hello, hoping you would be able to answer some questions for me when it comes to buying my own house and what I would be able to qualify for!
-Thanks Sam