Mandatory FHA Waiting Period After Bankruptcy And Foreclosure

What Are FHA Waiting Period After Bankruptcy And Foreclosure

There are mandatory FHA Waiting Period After Bankruptcy And Foreclosure as well as FHA Waiting Period After Short Sale to qualify for a FHA Loan. HUD, parent of the Federal Housing Administration or FHA, is the federal agency that sets standards and writes and enforces FHA Guidelines on qualification requirements through its most recent HUD 4000.1 FHA Handbook which sets all of the FHA lending guidelines. FHA Waiting Period After Bankruptcy And Foreclosure Guidelines require a mandatory waiting period after Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale in order for a FHA borrower to be eligible to qualify for a 3.5% down payment FHA home purchase mortgage loan.

FHA Waiting Period After Bankruptcy And Foreclosure: Waiting Period After Chapter 7 Bankruptcy Discharge

A Chapter 7 Bankruptcy is also known a total liquidation where consumers who are overwhelmed with debts and have no means to catch up and make those debt payments can use this federal tool to ask the courts to discharge their debts where they can get a new fresh start on their financial life. Main reason for consumers that file Chapter 7 Bankruptcy is because they lose their jobs and/or businesses where they no longer have an income source or a large reduction of their household income where they can no longer pay their debts. Other reasons for consumers that file Chapter 7 Bankruptcy is due to divorce as well as medical reasons where they are overdrowned in debts and there is no way of catching up on their monthly debt payments with the income they are making or due to unemployment. A Chapter 7 Bankruptcy will discharge most debts including collection accounts, charge off accounts, civil judgments, liens, wage garnishments, and personal debts. Debts not dischargeable through a Chapter 7 Bankruptcy are government debts such as federal backed student loans, tax liens, fines owing to the government, child support payments, alimony payments, federal taxes, state taxes, county and local taxes, and fines imposed by any local, county, state, and federal government agencies.

Home Buyers can qualify for a FHA Loan in just two years after a Chapter 7 Bankruptcy discharge with no late payments or derogatory credit after their Chapter 7 Bankruptcy. A minimum of 580 FICO credit score is required to qualify for a 3.5% down payment FHA home purchase loan after a Chapter 7 Bankruptcy. Home Buyers with credit scores under 580 FICO credit scores can qualify for a FHA Loan after a Chapter 7 Bankruptcy as long as they have 10% down payment and compensating factors . Mortgage lenders like to see borrowers with a prior Chapter 7 Bankruptcy to have re-established credit after Chapter 7 Bankruptcy and frown upon late payments after a Chapter 7 Bankruptcy.

FHA Waiting Period After Bankruptcy And Foreclosure: Waiting Period After Chapter 13 Bankruptcy

A Chapter 13 Bankruptcy is also called a debt restructuring plan where the consumer gets appointed a Chapter 13 Bankruptcy Trustee and the Trustee will go over the income of the petitioner of the Chapter 13 Bankruptcy and allocate a portion of their income and allocate that portion to the list of the petitioners creditors for a period of time, which is normally between three to five years. After the repayment plan is over, the remaining debts owed to consumer’s creditors are discharged or wiped off and the consumer is debt free where they can restart their financial life. In order to qualify for a Chapter 13 Bankruptcy, the petitioner of the Chapter 13 Bankruptcy needs to be employed with documented income. Unemployed people will  not qualify for a Chapter 13 Bankruptcy.

A consumer who filed a Chapter 13 Bankruptcy can qualify for a FHA Loan one year into the Chapter 13 Bankruptcy as long as they can provide they have been timely with all of their payments to their creditors for the past 12 months and the approval of the Chapter 13 Bankruptcy Trustee.

A consumer who just had a Chapter 13 Bankruptcy discharged can qualify for a FHA Loan right after the Chapter 13 Bankruptcy discharged date with no waiting period. However, if the Chapter 13 Bankruptcy discharge has been less than two years, then the FHA Loan needs to be a manual underwriting because any Chapter 13 Bankruptcy FHA Loan applications with less than two years of the discharge date will not get an approve/eligible per DU FINDINGS .

Waiting Period After Foreclosure, Deed In Lieu Of Foreclosure, Short Sale

There is a three year waiting period after the recorded date or the date of the sheriff’s sale of a foreclosure and/or deed in lieu of foreclosure to qualify for a FHA Loan. There is a three year waiting period to qualify for a FHA Loan from the date of a short sale to qualify for a FHA Loan. There is a three year waiting period from the date of a mortgage charge off and/or second mortgage charge off to qualify for a FHA Loan.

Mortgage lenders do not want to see any late payments after a foreclosure, deed in lieu of foreclosure, or short sale. If you have had any late payments after a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale and are told that you do not qualify for a FHA Loan, please contact me at 262-716-8151 or email me at gcho@gustancho.com and I can help you. I am available 7 days a week, evenings, weekends, and holidays to take your phone calls and answer all of your questions.

Mortgage Rates With A Prior Bankruptcy And Foreclosure

Many mortgage loan borrowers think that they will be paying a higher mortgage rate due to a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. This is not true. Prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale has nothing to do with mortgage rates, in both FHA Loan Programs, and Conventional Loan Programs. The main factor that dictates mortgage rates on FHA Loans are credit scores. With Conventional Loans, credit scores and loan to value are the indicators of mortgage rates and a prior bankruptcy or foreclosure has no bearing on what interest rates the borrower gets. There are no pricing adjustments for a prior bankruptcy or foreclosure on the mortgage rates the borrower will get.

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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