Mortgage Guidelines After Bankruptcy And Foreclosure On Home Loans

This ARTICLE Is About Mortgage Guidelines After Bankruptcy And Foreclosure On Home Loans

Many homebuyers do not realize they can qualify for a mortgage after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. Mortgage Guidelines After Bankruptcy And Foreclosure depends on the individual mortgage program. Government and Conventional loans have mandatory waiting periods after bankruptcy and/or a housing event. The waiting period mortgage guidelines after bankruptcy and foreclosure depend on the individual mortgage loan program.

Gustan Cho Associates offers Non-QM loans. There is no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale. In this article, we need to cover and discuss Mortgage Guidelines After Bankruptcy And Foreclosure On Home Loans.

Mortgage Guidelines After Bankruptcy And Foreclosure With Traditional Loans

Mortgage Guidelines After Bankruptcy And Foreclosure With Traditional Loans

Government and conventional mortgages have a minimum waiting period requirement after bankruptcy and/or housing events. A housing event is a foreclosure, deed in lieu of foreclosure, or a short sale. The waiting period requirement differs depending on the loan program. Besides waiting out the mandatory waiting period, lenders want to see the borrower has re-established their credit and have no late payments since the bankruptcy and/or foreclosure. The VA and HUD allow borrowers to qualify for VA and/or FHA loans during the Chapter 13 Bankruptcy Repayment period. Chapter 13 Bankruptcy does not have to be discharged on FHA and/or VA loans.

Alternative Mortgage Guidelines After Bankruptcy And Foreclosure

Gustan Cho Associates Mortgage Group offers alternative Non-QM loan programs. There are no waiting period requirements after bankruptcy and/or foreclosure with non-QM loans. Non-QM loans are becoming increasingly popular. Alternative financing loan programs, portfolio loans, and Non-QM loans are not hard money loans. They are portfolio loans and a type of alternative financing for borrowers who may not meet government, conforming, and/or traditional jumbo mortgage guidelines. Borrowers can qualify for a mortgage one day out of foreclosure and/or bankruptcy with non-QM loans.

Non-QM Guidelines After Bankruptcy And Foreclosure

To be eligible for non-QM loans after bankruptcy and/or a housing event, the following need to apply:

  • Foreclosure, short sale, deed-in-lieu of foreclosure, modification, and recent late payments (must be settled)
  • One day after the discharged date of Chapter 7, 13, and/or 11
  • Borrowers in Chapter 13 Bankruptcy repayment plan are not eligible for Non-QM loans until Chapter 13 has been discharged

There are other benefits to using non-QM loans.

Borrowers Benefiting Using Non-QM Mortgages

Borrowers Benefiting Using Non-QM Mortgages

Besides the no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short-sale, there are many other benefits of using non-QM loans:

  • Non-QM mortgage guidelines allow late payments in the past 12 months which includes mortgage late payments
  • Self-employed borrowers do not have to use their income tax returns with our 12-month bank statement loans for self-employed borrowers
  • Deferred student loans that have been deferred for longer than 12 months are normally exempt from debt to income calculations by mortgage underwriters

Non-QM lenders can be negotiable when it comes to terms and guidelines. Exceptions can be made for borrowers who have strong compensating factors.

Down Payment And Reserves

The down payment requirements on non-QM loans depend on various factors. Here are the factors that affect the down payment requirements on Non-QM mortgages:

  • Credit scores
  • Type of property
  • Borrower’s debt to income ratios
  • The seasoning after bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short-sale
  • Mortgage rates depend on the borrower’s credit scores and/or down payment
  • In general, a 10% to 20% down payment is required
  • The minimum credit score required to be eligible for non-QM financing is 500 FICO
  • Non-QM loans are for primary, second homes, and investment property financing
  • Up to 55% debt to income ratio allowed with compensating factors
  • Loan sizes between $100,000 to $5 million

Other loan level pricing adjustments may apply.

Mortgage After Bankruptcy And Foreclosure On Conforming Loans

The following are the mandatory waiting period guidelines on conventional loans:

  • There is a four-year waiting period is required from the discharge or dismissal date of Chapter 7 Bankruptcy to qualify for Conventional loans
  • There is a two-year waiting period after the Chapter 13 Bankruptcy discharged date
  • There is a four-year waiting period after a deed in lieu of foreclosure and/or a short sale to qualify for conventional loans
  • There is a four-year waiting period after a mortgage charge-off to qualify for conventional loans

If a mortgage was included as part of the bankruptcy and the homeowner did not reaffirm the mortgage, there is a four-year waiting period after bankruptcy to qualify for a mortgage. The date of the foreclosure and/or housing event does not matter.

HUD Guidelines After Bankruptcy And Foreclosure

HUD Guidelines After Bankruptcy And Foreclosure

HUD sets the Mortgage Guidelines After Bankruptcy And Foreclosure on FHA loans:

  • There is a two-year waiting period after the Chapter 7 Bankruptcy discharged date
  • There is a three-year waiting period after a foreclosure, deed in lieu of foreclosure, and/or a short sale to qualify for FHA loans
  • Borrowers can qualify for FHA loans during Chapter 13 repayment plan one year starting Chapter 13 repayment plan
  • Chapter 13 Bankruptcy does not have to be discharged
  • Needs to be a manual underwrite.

There are no waiting period requirements after the Chapter 13 Bankruptcy discharged date to qualify for FHA loans. Any borrower with a Chapter 13 Bankruptcy that has been seasoned for less than 2 years will need the FHA loan manually underwritten.

USDA Guidelines After Bankruptcy And Foreclosure

USDA allows for 100% financing with no down payment required by homebuyers. There is a three-year waiting period to qualify after the Chapter 7 bankruptcy discharge date. Buying a house after foreclosure, deed-in-lieu of foreclosure, a short sale has a three-year waiting period to qualify for USDA loans.

VA Guidelines After Bankruptcy And Foreclosure

The VA has the most lenient mortgage guidelines when it comes to waiting period requirements:

  • There is a two year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for VA loans
  • Foreclosure, deed in of foreclosure, short sale have a 2-year waiting period to qualify for VA loans
  • Borrowers can qualify for VA loans during Chapter 13 repayment plan one year starting Chapter 13 repayment plan
  • Chapter 13 Bankruptcy does not have to be discharged to qualify for VA loans
  • Manual underwriting applies for VA loans during Chapter 13 Bankruptcy repayment plan
  • Bankruptcy trustee approval required
  • There are no waiting period requirements after the Chapter 13 discharge date to qualify for VA loans
  • Any Chapter 13 Bankruptcy that has not been seasoned for at least 24 months after the discharged date needs to be manual underwriting.

A prior bankruptcy, foreclosure, deed in lieu of foreclosure, a short sale will not have any affect on the pricing of the loan. What this means is that there will be no pricing hits on mortgage rates. Many borrowers are under the impression they will get a higher rate due to a prior bankruptcy and/or a housing event. However, this is not true. Gustan Cho Associates has non-QM mortgages one day out of bankruptcy and foreclosure with a 30% down payment available for our borrowers.

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