Is It Better To Apply For FHA Loan During Or After Chapter 13 Bankruptcy Discharge

Is It Better To Apply For FHA Loan During Or After Chapter 13 Bankruptcy Discharge

This BLOG On Is It Better To Apply For FHA Loan During Or After Chapter 13 Bankruptcy Discharge

Is it better to apply for a FHA Loan During Or After Chapter 13 Bankruptcy Discharge? This is what many home buyers who are in a Chapter 13 Bankruptcy Repayment Plan want to know. Many of our viewers are getting mixed answers by lenders when asked on qualifying for a FHA Loan after a Chapter 13 Bankruptcy discharged date.

FHA Guidelines On Qualifying For FHA Loan During Chapter 13 Bankruptcy Repayment Period

Home buyers can qualify for a FHA Loan during a Chapter 13 Bankruptcy Repayment Period. Here are the guidelines in qualifying for a FHA Loan During Chapter 13 Repayment Period :

  • Borrowers can qualify for a FHA Loan During Chapter 13 Bankruptcy Repayment Period one year into their Chapter 13 Bankruptcy Repayment Plan
  • Borrower will need the approval of their Chapter 13 Bankruptcy Trustee which is not a problem. I have never seen a case where the Chapter 13 Bankruptcy Trustee did not approve the borrower of a home loan as long as they were able to afford the monthly mortgage payment
  • Borrower needs to have been timely will all of their monthly payments since the start of their Chapter 13 Bankruptcy Repayment
  • Borrower needs verification of rent which is 12 months canceled checks of their rent payment, 12 months bank statements showing timely monthly mortgage payments. If borrower has been renting from a registered property management company, then a VOR form completed by the property management company which the form is provided by the lender can be used in lieu of the 12 months canceled checks and/or bank statements
  • Mortgage file needs to be manually underwritten
  • Compensating Factors required

FHA Guidelines In Qualifying For FHA Loan After Chapter 13 Bankruptcy Discharge

Is It Better To Apply For FHA Loan During Or After Chapter 13 Bankruptcy Discharge? This is where many borrowers get really confused by the answers being told by various lenders. Many borrowers are told that they would qualify for a FHA Loan while in a Chapter 13 Bankruptcy Repayment Plan, however, they DO NOT Qualify for a FHA Loan after a Chapter 13 Bankruptcy discharge unless they pass a two year waiting period. Does this make sense? For most of us, this does not make sense, however, there are many lenders that will require a waiting period after a Chapter 13 Bankruptcy discharged date of one to two years.

FHA Guidelines on qualifying for a FHA Loan after a Chapter 13 Bankruptcy discharged date are the following:

  • FHA does not require any waiting period after a Chapter 13 Bankruptcy discharged date
  • If the Chapter 13 Bankruptcy discharge has not been seasoned for two years, then the file needs to be a manual underwrite and manual underwriting guidelines applies
  • Verification Of Rent is required on all manual underwriting and payment shock will be considered a compensating factor
  • No late payments during and after a Chapter 13 Bankruptcy
  • Re-established credit
  • Compensating Factors

If you go to a lender after a Chapter 13 Bankruptcy discharge and tell you that you do not qualify because you need to meet a mandatory waiting period, remember that you may not qualify with the lender you consulted with but that does not mean that you do not qualify for a FHA Loan. Please contact Gustan Cho at The Gustan Cho Team at CrossCountry Mortgage at 262-878-1965 or text Gustan Cho at 262-716-8151 for faster response. We do not have any lender overlays on FHA Loans after a Chapter 13 Bankruptcy discharged date. You can also email us at gcho@gustancho.com.

Is It Better To Qualify For A FHA Loan During Or After A Chapter 13 Bankruptcy Discharged Date?

Is It Better To Apply For FHA Loan During Or After Chapter 13 Bankruptcy Discharge? Most would say it would be better to qualify for a FHA Loan after a Chapter 13 Bankruptcy discharge rather than during a Chapter 13 Repayment Period. However, it is normally better to qualify for a FHA Loan during a Chapter 13 Bankruptcy repayment period because the payments that you are making to your creditors is considered credit tradelines. Once your Chapter 13 Bankruptcy has been discharged, all of those credit tradelines are closed and unless you have revolving and/or open installment accounts, you will not longer have any more credit tradelines. This will shun you out with many lenders because many lenders will have overlays on credit tradelines. Many lenders will not approve you for a FHA Loan without three credit tradelines that has been seasoned for at least one year while some require two year seasoned credit tradelines. This is why it is better to apply for a FHA Loan while in a Chapter 13 Bankruptcy Repayment Period than after a Chapter 13 Bankruptcy discharge. At The Gustan Cho Team at CrossCountry Mortgage, we have no Lender Overlays so it does not matter whether you are applying for a FHA Loan while in a Chapter 13 Bankruptcy or After a Chapter 13 Bankruptcy discharged date. If you have any questions in qualifying for a FHA Loan during or after a Chapter 13 Bankruptcy discharged date and need to qualify for a FHA Loan with a lender with no overlays, please contact Gustan Cho at The Gustan Cho Team at CrossCountry Mortgage Inc. NMLS 3029 at 262-878-1965 or text Gustan Cho NMLS 873293 at 1-262-716-8151 for faster response. You can also email us at gcho@gustancho.com.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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