What Are The Requirements To Qualify For Mortgage After Bankruptcies

This BLOG On Mortgage After Bankruptcies Was Written By Gustan Cho NMLS 873293

Home buyers qualifying for mortgage after bankruptcies: Home buyers can qualify for mortgage after bankruptcies after they pass the waiting periods. There are separate types of qualification requirements depending on the types of bankruptcies.

  • Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy

Borrowers can qualify for mortgage after bankruptcies and foreclosures. However, there are requirements borrowers must meet.

Mandatory Waiting Period After Bankruptcy

All mortgage loan programs have waiting period after bankruptcies. The waiting period depends on the type of bankruptcy and the type of loan program the borrower is trying to qualify for.

The following are the mortgage guidelines with regards to the waiting period after bankruptcy and the loan program:

  • FHA requires a 2 year waiting period after a Chapter 7 Bankruptcy discharged date.
  • VA requires a 2 year waiting period after a Chapter 7 Bankruptcy discharge date as well.
  • Fannie Mae and Freddie Mac require a four year waiting period to qualify for a Conventional Loan after a Chapter 7.
  • Most Jumbo Lenders will require a 7 year wait period, however, there are lenders that will accept a Jumbo Borrower who has been 4 years out of a Chapter 7.
  • No late payments after a bankruptcy or foreclosure. 

The underwriter will also look at the borrower’s credit profile before the event to see whether he or she established a good payment history. However, the most important factor the underwriter will consider is the applicant’s housing payment record after the bankruptcy discharge; whether rental or mortgage, it must display perfect payment history.

Mortgage Loan After Chapter 13 Bankruptcy

Borrowers can qualify for a FHA Loan while in a Chapter 13 or after the Chapter 13 Bankruptcy discharge date:

  • For those who are under a Chapter 13 bankruptcy re-payment plan, they can qualify for a residential mortgage loan 12 months into their Chapter 13 bankruptcy with the approval of the Chapter 13 bankruptcy trustee. 
  • For those who just had there Chapter 13 bankruptcy discharged, there is no mandatory waiting period. 
  • However, it will need to be a manual underwrite and all manual underwriting mortgage loan applications require verification of rent, also known as VOR. 
  • Rental Verification can only be provided by providing 12 months canceled checks if you are renting from a private landlord. 
  • If you are renting from a registered property management company, all you need is a letter from the property manager of the property management company stating that you have been timely on your rental payments for the past 12 months.

Foreclosure Part Of Bankruptcy

If you had a mortgage as part of your bankruptcy, there is a four year waiting period after the discharge date of your bankruptcy to qualify for a conventional mortgage loan under Fannie Mae and Freddie Mac Guidelines. The foreclosure can be recorded after the Chapter 7 Bankruptcy discharged date and that does not matter. The four year waiting period clock will start from the discharged date of the Chapter 7 Bankruptcy. In order for borrowers to qualify, the foreclosure needs to have been finalized and not be pending.

There is a three year waiting period to qualify for a FHA Loan after the recorded date of the foreclosure that is recorded on the county’s recorder of deeds office. If the borrower had a mortgage as part of their Chapter 7 Bankruptcy, the waiting period to qualify for a FHA Loan starts from the recorded date of the foreclosure and not the Chapter 7 Bankruptcy discharged date. HUD Guidelines on mortgage part of Chapter 7 Bankruptcy is different than Fannie Mae and Freddie Mac.

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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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