Mortgage Guidelines After Bankruptcy

Mortgage Guidelines After Bankruptcy on Home Purchase

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss the mortgage guidelines after bankruptcy on home purchases and refinance transactions. There is a mandatory waiting period after bankruptcy to qualify for government and conventional loans. Gustan Cho Associates offers non-QM loans. Mortgage Guidelines After Bankruptcy on non-QM loans do not require any waiting period after bankruptcy and/or housing events. After bankruptcy, obtaining a mortgage for a home purchase can be challenging, but it’s not impossible. Guidelines and requirements may vary depending on Chapter 7 or Chapter 13 Bankruptcy and the lender’s policies. Here are some general guidelines to consider:

Wait Period After Bankruptcy

For a Chapter 7 bankruptcy, you must typically wait at least 2-4 years from the discharge date before applying for a mortgage. For a Chapter 13 bankruptcy, you may qualify for a mortgage while in Chapter 13 or shortly after the repayment plan is completed. However, you will likely need approval from the bankruptcy court and a good payment history. Lenders will examine your credit score, and while there’s no specific score required, a higher credit score will increase your chances of approval. Aim for a credit score of at least 620, but higher scores are better. After bankruptcy, focus on rebuilding credit by paying existing debts and avoiding new debt. This will improve your creditworthiness.

Steady Income

Lenders want to see that you have a stable source of income and can afford the mortgage payments. A steady job and income history will be beneficial. Be prepared to make a down payment. The required down payment may vary, but it’s often higher than what’s required for borrowers with good credit. Different lenders may have varying requirements, so shopping around and comparing offers from multiple lenders is essential. FHA and VA Loans: Government-backed loans, such as FHA and VA loans, may have more lenient requirements for borrowers with a bankruptcy history. You might be eligible for these loans sooner than conventional loans.

Private Mortgage Insurance (PMI)

If you have a smaller down payment, you may be required to pay for PMI until you have built up enough equity in the home. Be prepared to explain the circumstances surrounding your bankruptcy. Some lenders may be more willing to work with borrowers with a one-time financial setback.

Consult with a mortgage advisor or financial counselor specializing in post-bankruptcy home buying. They can provide guidance tailored to your specific situation.

Remember that each lender may have different policies, so it’s crucial to research and speak with multiple lenders to find one willing to work with your specific circumstances. Additionally, continue improving your credit and financial stability to increase your chances of securing a mortgage after bankruptcy.

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Mortgage Guidelines After Bankruptcy on Traditional and Non-QM Loans

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There are three government-backed mortgage loan programs: FHA, VA, and USDA loans. Fannie Mae and Freddie Mac regulate conventional loans through the Federal Housing Finance Agency (FHFA). All government and conventional loan programs have mandatory waiting period requirements and mortgage guidelines after bankruptcy. However, non-QM and alternative financing loan programs do not have waiting period requirements.

Mortgage Guidelines After Bankruptcy on Non-QM Home Loans

Non-QM mortgages one day out of bankruptcy require a 20% to 30% down payment is required. The amount of the down payment is dependent on the borrower’s credit score. Mortgage rates are determined by borrowers’ credit scores and down payment. In this article, we will discuss and cover mortgage guidelines after bankruptcy on home purchase.

After Bankruptcy on Home Purchase (2)Hiring real estate attorneys is not a common practice in most states. However, most home buyers and sellers in Illinois normally hire real estate attorneys to represent them on real estate transactions.  A sharp attorney will have a keen eye in making sure their clients are protected in their real estate transactions. In the event the subject property has flaws such as foundation damage, mold, or other defects that were not noticed during the first walkthrough, they should be protected prior to closing.

Contact us today to get your home in your choice area, click here

Can I Decide Not To Hire an Attorney For My Home Purchase?

Hiring an attorney for your home purchase or if you are selling your home as a seller is by no means mandatory. Even in states where the common practice is to have an attorney represent each side, there is no law stating homebuyers and sellers need to be represented by an attorney. Gustan Cho Associates will not endorse or recommend a law firm or real estate attorney unless we have done business with them. Home buyers and homeowners can choose any real estate attorney of their choice. It is always recommended that clients feel comfortable with the law firm they decide to represent their legal transaction.

What Is The Role of Real Estate Attorneys For Homebuyers?

Real estate attorneys will see that the home buyer has an out. Buyers will want to recover their earnest money in the event the mortgage loan does not go through. The field of law is so broad and complex. Home buyers should retain only attorneys whose practice is concentrated in real estate law. Not general practitioners who are a jack of all trades. For example, buyers do not want a divorce attorney or corporate attorney to represent them on their real estate closing.

Hiring an Attorney To File For Bankruptcy

Bankruptcy is not the end of the world. Actually, bankruptcy is a good thing. Filing bankruptcy enables you to get your debts discharged and start a fresh financial slate with zero debts. You can purchase a house after bankruptcy. You will not go through any red tape after bankruptcy qualifying for a mortgage. There are waiting period requirements on government and conventional loans after bankruptcy. However, there are non-QM loans one day out of bankruptcy and foreclosure with a 30% down payment.

Do I Hire a Real Estate Agent To Represent Me on a Home Purchase?

In certain states, such as Illinois, the common practice for home buyers and sellers is to hire real estate attorneys to represent them. However, in states such as Florida and dozens of other states, it is not common practice for home buyers and sellers to hire a real estate attorney to represent them at closing. The title agent at the title company is the person quarterbacking the home purchase closing. However, it is totally up to the individual buyer and seller whether they want to be represented by a real estate attorney.

How To Choose a Real Estate Attorney For Your Home Purchase

You will not run out of professionals that will refer you to their favorite real estate attorney of choice. I suggest you interview several attorneys and hire the person who you seem to best get along with.  A real estate attorney should not just be an agent who just shows up at the real estate closing but one who has the best interest of their clients. Attorneys should always be there when issues come up during the mortgage approval and real estate purchase and/or selling process. The team at Gustan Cho Associates recommends real estate attorneys, agents, and other professionals to our clients

Qualifying For Mortgage After Bankruptcy

Home Buyers can qualify for a mortgage after bankruptcy. Government and conventional loan programs have waiting period requirements after bankruptcy or foreclosure. The minimum waiting period requirements depend on the individual loan program. Each loan program has its own waiting period requirements.

Mortgage After Bankruptcy With No Waiting Period Requirements

Gustan Cho Associates offers non-QM mortgages one day out of bankruptcy and foreclosure. However, non-QM loans with no waiting period requirements require a 30% down payment. As the bankruptcy seasons from the discharge date, the down payment requirement becomes less and less. With the combination of higher credit scores and bankruptcy seasoning over a year, homebuyers can qualify for non-QM mortgage loans one day after bankruptcy with a 20% down payment.

Qualify for mortage after bankruptcy with no waiting period, click here

Waiting Period Guidelines After Bankruptcy

There is a 2-year waiting period to qualify for an FHA loan after the discharge of Chapter 7. Homebuyers can qualify for a mortgage to purchase a home one year into a Chapter 13 repayment plan to qualify for VA and/or FHA home loans. There is no waiting period after a Chapter 13 Bankruptcy discharge date to qualify for FHA and VA loans. Fannie Mae and Freddie Mac require a 4-year waiting period to qualify for a Chapter 7 Bankruptcy discharge date to qualify for Conventional loans.

Mortgage Guidelines During and After Chapter 13 Bankruptcy

There is a two-year waiting period to qualify after the Chapter 13 discharge date to qualify for Conventional loans. The waiting period is four years after the Chapter 13 dismissal date to qualify for conventional loans. There is a four-year waiting period to qualify for a conventional loan with a prior mortgage part of bankruptcy from discharged date of bankruptcy. The foreclosure needs to be finalized. If you are trying to qualify for Bankruptcy with no overlays contact us at Gustan Cho Associates at 262-718-8151 or text for faster response. Or email us at The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

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