Qualifying For FHA Loan During Chapter 13 Bankruptcy Process
Can I Qualify For FHA Loan During Chapter 13 Bankruptcy Process
Home Buyers can qualify for FHA Loan During Chapter 13 Bankruptcy Process one year into the Chapter 13 Bankruptcy and with the approval of the Chapter 13 Bankruptcy Trustee. FHA requires that the home buyer needs to have at least 12 months payment history and timely payment history for at least 12 months with no late payments during the Chapter 13 Bankruptcy repayment plan. All FHA Loan During Chapter 13 Bankruptcy Process are manual underwriting and only FHA approved mortgage lenders who are able to do manual underwriting can do FHA Loan During Chapter 13 Bankruptcy Process. FHA Manual Underwriting Guidelines applies when qualifying for FHA Loan During Chapter 13 Bankruptcy Process and one of the criteria with manual underwrites is that verification of rent is required. The only way verification of rent can be valid is by providing 12 months of canceled checks the renter has paid to their landlord and/or 12 months of bank statements showing that the monthly rental payments have been paid out of the renter’s bank account into the bank account of the landlord. All 12 months rental payments needs to have been made timely and no late payments are allowed in the past 12 months in order for the verification of rent to be valid. If the renter has been renting their apartment and/or home from a registered property management company, the VOR provided and signed by the property manager of the property management company can be used in lieu of 12 months canceled checks and/or 12 months bank statements.
FHA Loan During Chapter 13 Bankruptcy Process: Why Is Verification Of Rent So Important
All FHA Loan During Chapter 13 Bankruptcy Process are manual underwriting. All FHA manual underwriting require verification of rent. Verification Of Rent is extremely important because it determines rental payment shock . Payment Shock is the difference between what a new home buyer is paying for rent to what he or she will be paying on his or her new mortgage payment. For example, if a renter is paying $1,000 for rent and his or her new proposed housing payment, P.I.T.I. ( Principal, Interest, Taxes, Insurance ) is $1,500, the new home buyer will have a payment shock of 50%. The lower the payment shock, the better mortgage lenders will view the borrower. A lower payment shock is considered a compensating factor which are positive factors to the mortgage borrower. Without verification of rent, the payment shock cannot be proven because the borrower is going from paying zero monthly rent to a new housing payment, P.I.T.I. Unfortunately, those who are living with family or cannot provide verification of rent and are seeking a FHA Loan During Chapter 13 Bankruptcy Process cannot qualify. Rental Verification is mandatory and there is no way around it. Those who are paying their rental payments timely but are paying with cash and are getting a paid receipt by their landlords do not have a valid verification of rent even with a cash paid receipt by the landlord. Cash payments do not count in the mortgage world and only canceled checks and/or bank statements is what can be used.
FHA Loan During Chapter 13 Bankruptcy Process: Late Payments After Bankruptcy
Mortgage Lenders want to see that mortgage loan borrowers have been timely during and after their Chapter 13 Bankruptcy Process. Late payments during Chapter 13 Bankruptcy repayment plan will be carefully looked at and it will not be viewed favorably. Same with late payments after a Chapter 13 Bankruptcy discharge. Mortgage lenders do not like to see any late payments on any of the borrower’s creditors after a Chapter 13 Bankruptcy discharge date. Many mortgage lenders will completely deny any borrowers who had any late payments during and after a Chapter 13 Bankruptcy. However, I can work with FHA borrowers who had a few late payments during and after a Chapter 13 Bankruptcy if they have a good letter of explanation on why they were late. I can also help the borrower to see if we can work with the creditor and see if the creditor can help in getting the late payments removed or some other credit repair alternative program. If you had any late payments during and/or after a Chapter 13 Bankruptcy and cannot qualify for a FHA Loan with another FHA mortgage lender, please contact me at 262-716-8151 or email me at firstname.lastname@example.org.
FHA Loan During Chapter 13 Bankruptcy Process: Qualification Requirements
Although HUD, the parent of the Federal Housing Administration or FHA, allows FHA Loan During Chapter 13 Bankruptcy Process, many mortgage lenders have FHA Investor Overlays . FHA Investor Overlays are additional mortgage lending guidelines where the individual mortgage lender places on top of the minimum FHA mortgage lending guidelines. For example, HUD may allow a home buyer to qualify for a FHA Loan During Chapter 13 Bankruptcy Process, however, a mortgage lender may not allow that and may not accept any borrowers who had a Chapter 13 Bankruptcy until two years after a Chapter 13 Bankruptcy discharged date. This is extremely common. Minimum credit scores required to qualify for FHA Loan During Chapter 13 Bankruptcy Process for a 3.5% down payment FHA home purchase loan is 580 FICO credit scores. Chapter 13 Bankruptcy Trustee approval is necessary, which is most Chapter 13 Bankruptcy Trustee’s will approve and never had an issue with a Chapter 13 Bankruptcy Trustee not approving a home purchase for a FHA Loan During Chapter 13 Bankruptcy Process. Verification Of Rent is definitely required because all FHA Loan During Chapter 13 Bankruptcy Process are manual underwrites and all manual underwriting FHA Loans require verification of rent. No late payments are allowed for FHA Loan During Chapter 13 Bankruptcy Process and at least of 12 months worth of payments needs to have been made to all creditors in the Chapter 13 Bankruptcy Repayment Plan. Compensating Factors will be looked at. Examples of compensating factors include reserves, larger down payment, income such as part time income or second jobs that the borrower has but is not used to qualify in the mortgage loan approval process. If you need a FHA Loan During Chapter 13 Bankruptcy Process and are looking for a FHA Lender with no FHA Investor Overlays, please contact me at 262-716-8151 or email me at email@example.com. I am available 7 days a week, evenings, weekends, and holidays to take your phone calls or emails and answer any questions you may have.