Mortgage After Bankruptcy in Minnesota Home Loan Options

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will cover and discuss qualifying for a mortgage after bankruptcy in Minnesota with traditional and non-prime home loans. Homebuyers can qualify for a mortgage after bankruptcy in Minnesota with traditional and non-prime loan programs. There are mandatory waiting period requirements to qualify for a mortgage after bankruptcy in Minnesota on government-backed and conventional loans. However, there are mortgage options where there are no waiting period requirements after bankruptcy. Gustan Cho Associates are mortgage brokers licensed in 48 states and are experts in helping homebuyers qualify for a mortgage after bankruptcy in Minnesota.  In this blog, we will cover the various loan options for qualifying for a mortgage after bankruptcy in Minnesota during the booming housing market.

Getting a Mortgage After Bankruptcy in Minnesota

Getting a Mortgage After Bankruptcy in Minnesota

Homebuyers who are ready and able to purchase a home sooner than later can qualify for a mortgage after bankruptcy in Minnesota without a waiting period requirement. The housing market is booming throughout the state of Minnesota and bankruptcy should not deter homebuyers from getting priced out of the housing market. Some folks recover sooner than others after bankruptcy. Non-QM loans one day after bankruptcy has no waiting period requirements after bankruptcy. However, non-QM loans require a 20% or higher down payment.

How Soon Can I Qualify For a Mortgage After Bankruptcy in Minnesota?

In general, there are mandatory waiting period requirements after bankruptcy on government-backed mortgages and conventional loans. HUD and the Department of Veterans Affairs allow borrowers to be eligible for FHA and VA loans during the Chapter 13 Bankruptcy repayment plan. Chapter 13 Bankruptcy does not have to be discharged. Borrowers can qualify for FHA and VA loans one year after filing Chapter 13 Bankruptcy. Need to provide 12 months of timely payments. In this article, we will cover and discuss the various mortgage options after bankruptcy for Minnesota homebuyers.

Down Payment Required For Mortgage After Bankruptcy in Minnesota

Homebuyers can qualify for a mortgage after bankruptcy in Minnesota. Government and conventional loans need to meet minimum agency guidelines of HUD, VA, USDA, Fannie Mae, and Freddie Mac. Each agency’s mortgage guidelines are different. Besides meeting the minimum agency guidelines, lenders can have their own internal lender overlays on FHA, VA, USDA, and conventional loans. We will also answer the most frequently asked questions by our clients who start the mortgage loan process.

What Is The Minimum Credit Score Required To Get Mortgage After Bankruptcy in Minnesota?

There are minimum credit score requirements to qualify for a mortgage loan. Not all mortgage lenders have the same credit score requirements on government and conventional loans. Although there are many credit factors that need to be met by borrowers to qualify for a mortgage loan, borrowers need specific minimum credit scores. FHA and VA loans allow borrowers with credit scores down to a 500 credit score to qualify. FHA loans require a 10% down payment for borrowers with credit scores between 500 to 579 FICO. VA loans do not have a minimum credit score requirement for 100% financing as long as the borrower can get an approve/eligible per automated underwriting system approval.

What Type of Mortgage After Bankruptcy in Minnesota Can You Get?

Mortgage After Bankruptcy Guidelines on Chapter 7 Versus Chapter 13 Bankruptcy

Both FHA and VA require a two year waiting period after Chapter 7 Bankruptcy discharged date to be eligible for FHA and VA loans. Re-establish credit and no late payments after bankruptcy discharged date is required.  FHA and VA loans do not have a waiting period requirement after Chapter 13 Bankruptcy discharged date. Chapter 7 and Chapter 13 Bankruptcy has two separate types of guidelines. We will cover qualifying for an FHA and VA loan during and after Chapter 13 Bankruptcy in Minnesota in great detail. Gustan Cho Associates offers non-QM home loans one day out of bankruptcy with no waiting period.

  • There is a two-year waiting period requirement after the Chapter 7 Bankruptcy discharged date on FHA loans
  • There is a two-year waiting period requirement after the Chapter 7 Bankruptcy discharged date on VA home loans
  • The waiting period is three years after the discharge date of Chapter 7 Bankruptcy on USDA loans
  • Fannie Mae and Freddie Mac require a four-year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for conventional loans
  • The waiting period on Jumbo loans depends on the individual mortgage lender.

Gustan Cho Associates has non-QM loans one day out of bankruptcy. However, non-QM mortgages one day out of bankruptcy require a 30% down payment. As the bankruptcy seasons and/or ages, the down payment requirements lessen to 20%.

How Soon Can I Get a Mortgage After Filing Chapter 13 Bankruptcy in Minnesota 

The good news is HUD and VA allow borrowers to be eligible to qualify for FHA and VA loans one year after filing Chapter 13 Bankruptcy. Borrowers need to have made 12 timely payments on their Chapter 13 payment plan with no late payments. The bankruptcy trustee needs to have approved the mortgage. Many borrowers are worried about the bankruptcy trustee signing off on the mortgage. The team at Gustan Cho Associates has never had any issues with a Chapter 13 trustee signing off on a mortgage on a home purchase and/or even on a cash-out refinance during the Chapter 13 Bankruptcy repayment plan. The Chapter 13 Bankruptcy does not need to be discharged to qualify for FHA and VA loans during the Chapter 13 Bankruptcy repayment plan. It needs to be a manual underwrite. We will discuss manual underwriting later in the article.

Getting a Mortgage During Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Mortgage Guidelines Minnesota on FHA and VA loans are almost identical. The only traditional mortgage loan program that allows home buyers to buy a house during the Chapter 13 payment plan are FHA and VA loans. All other traditional mortgages require a waiting period after the Chapter 13 Bankruptcy discharge date. All FHA and VA loans during Chapter 13 repayment plans are manually underwritten. The manual underwriting guidelines on HUD and VA are almost exactly identical. We decided to write one blog combining the two loan programs together to cater to both homebuyers of FHA and VA loans. Chapter 13 Bankruptcy Mortgage Guidelines Minnesota is straightforward and simple. We will discuss and cover the various other mortgage loan options for borrowers who do not qualify for FHA and VA loans.

Can Chapter 13 Bankruptcy Still Be Active To Qualify For a Mortgage?

Per Chapter 13 Bankruptcy Mortgage Guidelines on both FHA loans and VA loans allow homebuyers in Minnesota to qualify for a home loan during the Chapter 13 Bankruptcy repayment plan. To qualify, borrowers need to be in the repayment plan for at least 12 months. Timely payments during the Chapter 13 repayment period are required unless an out-of-the-ordinary extenuating circumstance happened. The bankruptcy trustee needs to approve the mortgage. A large percentage of our borrowers at Gustan Cho Associates are folks who are applying for a mortgage loan during Chapter 13 Bankruptcy and/or have gotten recently discharged.

FHA Loans During Chapter 13 Bankruptcy in Minnesota

FHA Loans During Chapter 13 Bankruptcy in Minnesota

Homebuyers can qualify for an FHA loan during and after Chapter 13 Bankruptcy in Minnesota. Chapter 13 Bankruptcy does not have to be discharged. Needs to be a manual underwrite with bankruptcy trustee approval.

FHA and VA loans are the only two mortgage loan programs that allow manual underwriting. The manual underwriting guidelines n VA and FHA loans are exactly the same. The main difference between manual and automated underwriting system (AUS) underwrites is the debt-to-income ratio caps on manual underwriting have lower limits. DTI on manual underwriting depends on the number of compensating factors.

How Difficult Is It To Get an FHA and VA Loans Approval During Active Chapter 13 Payment Plan

In the following paragraphs, we will cover and discuss the Chapter 13 Bankruptcy mortgage guidelines n Minnesota for homebuyers to qualify for an FHA and/or VA loan. We will also detail and interpret the manual underwriting guidelines of FHA and VA loans. Surprisingly, not too many loan officers and bankruptcy attorneys are familiar with getting an FHA and VA home loan approved during a Chapter 13 payment plan. Many borrowers, attorneys, and other related parties automatically assume the Chapter 13 Bankruptcy mortgage guidelines in Minnesota will be a major headache with a lot of red tape. This is absolutely not true. The team at Gustan Cho Associates are experts in all aspects of both FHA and VA Chapter 13 Bankruptcy Mortgage Guidelines Minnesota. By the time you are done with this article, you will have a full grasp on qualifying and getting either an FHA or VA mortgage loan approval during and after Chapter 13 Bankruptcy discharge.

Non-QM Loans and Alternative Mortgage Programs in Minnesota

Besides FHA and VA loans, Gustan Cho Associates offers a portfolio mortgage loan program that offers mortgages during Chapter 13 repayment plans. There are no waiting period requirements after the discharge date on non-QM loans.  Non-QM and subprime loans are portfolio mortgages with very flexible mortgage requirements. Mortgage requirements on non-QM loans are negotiable and exemptions by the non-QM lender can be made. A non-QM mortgage is an option for our borrowers who needs to look outside the box for a creative mortgage program. Per Chapter 13 Bankruptcy Mortgage Guidelines Minnesota for 2022, borrowers cannot have any late payments in the past 24 months on manual underwriting. HUD, the parent of FHA is firm on the 24 months’ timely payments on manual underwriting. The VA is more lenient on manual underwriting than FHA loan manual underwriting. You can get away with timely payment in the past 12 months on manual underwriting on VA loans.

Non-QM Down Payment Requirements in Minnesota

Gustan Cho Associates are mortgage brokers licensed in 48 states. We have a network of over 170 wholesale mortgage lenders. Our wholesale lending partners are fully vetted and on top of their expertise and guidelines on specialty mortgage loans. Our wholesale mortgage lenders of government and conventional loans are lenders with no lender overlays. GCA Mortgage has hundreds of mortgage options for owner-occupant primary homes, second homes, and investment properties.

What Is The Difference Between Non-QM Loans versus Qualified Mortgages

The difference between going FHA and VA loans during Chapter 13 Bankruptcy repayment or non-QM mortgages one day out of bankruptcy is the down payment requirements. VA loans do not require a down payment and FHA loans require a 3.5% down payment.  Non-QM loans down payment requirements depend on the layered risk of the lender. The higher the risk, the higher the rates and down payment requirements. In general, non-QM mortgages require a 20% or higher down payment.

Non-QM Home Loans One Day Out of Bankruptcy and/or a Housing Event in Minnesota

What Is The Difference Between Non-QM Loans versus Qualified Mortgages

If the borrower just literally got their bankruptcy discharged, the down payment requirement is 30%. As the bankruptcy and/or foreclosure ages, the down payment requirements become less because this is how lenders think. For prime borrowers with over 720 credit scores and strong compensating factors, non-QM mortgage lenders will off a 10% down payment on non-QM loans. Jumbo non-QM loans are very popular for self-employed home buyers and borrowers with lower credit scores.

Non-QM Loan Rates in Minnesota 

Non-QM mortgage lenders determine non-QM mortgage rates based on the borrowers’ layered risk tolerance. The higher the risk for the lender, the higher the mortgage rates on non-QM loans. The lower the risk tolerance for the mortgage lender, the lower the rates for the borrower. Mortgage lenders base mortgage rates on the layered risk. Lenders determine the following factors as a layered risk where they will place loan level pricing adjustments, referred to as LLPA. Loan level pricing adjustments are pricing hits due to layered risk factors.

  • The seasoning of bankruptcy and/or foreclosure determines non-QM mortgage rates
  • As the bankruptcy and/or foreclosure ages, the layered risk of the lender lowers
  • Higher credit scores with several solid credit tradelines are considered strong borrowers.
  • Lower credit score borrowers will take a pricing hit due to subprime credit levels

Non-QM loans in Minnesota require at least an average of a 20% down payment. Oftentimes, the non-QM mortgage lender will require a higher down payment. They are no comparison to FHA, VA, USDA, and conventional loans due to the minimum down payment required on traditional conforming loans.

Non-QM Mortgages in Minnesota

The team at Gustan Cho Associates and our wholesale lending associates get along great and make a great team. All of our wholesale mortgage representatives are mortgage professionals experts in their fields with many years of experience. We are proud to live up to our name of being a one-stop mortgage shop. GCA has every mortgage loan product on owner occupant, second homes, and investment properties that is available in the marketplace today. If we do not, we will sign up in a matter of days.

Non-QM Mortgages are typically recommended for:

  • Self-employed individuals.
  • Real estate investors.
  • Retirees who are interested in purchasing a second home that will not be their primary residence.
  • Small to midsize business owners.
  • Borrowers looking for interest-only payments or more flexible DSCR requirements.

Non-QM loans and alternative loan programs for borrowers who cannot qualify for traditional government and/or conforming loans. The only major difference is that non-QM loans generally require a 20% or higher down payment. The down payment requirements depend on the key factors the non-QM loan lender considers layered risk levels. Many of our wholesale lending partners offer niche or specialty alternative financing loan programs.