Can I Qualify For FHA Loan During Chapter 13 Bankruptcy?

FHA Loan During Chapter 13 Bankruptcy Repayment Plan

There are two types of bankruptcies for individuals who are drowning in debt and need relief from creditors and collections agencies. A Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy. A Chapter 7 Bankruptcy is called total liquidation where it benefits consumers who have very little to no assets and little to no income. If consumers have assets and are considering a Chapter 7 Bankruptcy, all of the assets will get liquidated and the proceeds will be distributed to the consumer’s creditors by the Bankruptcy Trustee. Most consumers who file Chapter 7 Bankruptcy are those who have little to no assets and little to no income. All debts, with the exception of government debts, will get discharged with a Chapter 7 Bankruptcy and the consumer can get a fresh financial start where they will no longer owe anything to any creditors. Outstanding collection accounts, no matter how much the outstanding unpaid balance is, as well as any judgments gets wiped out with a Chapter 7 Bankruptcy discharge.

With A Chapter 13 Bankruptcy, the consumer needs to have a source of income, whether it is a job, business, or other documented source of income in order to qualify for a Chapter 13 Bankruptcy. A Chapter 13 Bankruptcy is when the courts will appoint a Chapter 13 Bankruptcy Trustee where the Trustee will go over the overall finances of the Chapter 13 Bankruptcy petitioner and allocate a certain percentage of the consumer’s income to pay the creditors. The Chapter 13 Bankruptcy Trustee will propose a three to five year repayment plan of the creditors and after that period is over, whatever the balance is remaining will be discharged and the consumer will be debt free. Both Chapter 7 Bankruptcies and Chapter 13 Bankruptcies are federal laws to help consumers who had financial problems due to extenuating circumstances are was created to give relief to consumers to restart their lives and get a fresh start. Those who want to purchase a home can qualify for a FHA Loan During Chapter 13 Bankruptcy and home buyers can qualify for a FHA Loan after a Chapter 7 Bankruptcy discharge as well after a Chapter 13 Bankruptcy discharge.

Requirements For FHA Loan During Chapter 13 Bankruptcy Repayment Plan

Those who filed a Chapter 13 Bankruptcy and have been into a Chapter 13 Bankruptcy repayment plan for at least a year can qualify for a FHA Loan one year into their repayment plan with the approval of their Chapter 13 Bankruptcy Trustee. FHA Lenders will require at least 12 months of timely payments without any late payments in the past 12 months. All FHA Loan applications for borrowers applying for FHA Loans During Chapter 13 Bankruptcy Repayment Plans are manual underwrites which means that rental verification is required . All manual underwriting FHA Loans require verification of rent and compensating factors . Examples of compensating factors are larger down payment, reserves, longevity on the job, and other income that is not used as qualifying income. As standard automated approved FHA Loans, down payment requirements is 3.5% down payment on a home purchase and minimum credit scores to qualify for FHA Loan During Chapter 13 Bankruptcy Repayment Plan is 580 FICO credit scores.

Qualifying For FHA Loan After Bankruptcy

You cannot qualify for a FHA Loan after a Chapter 7 Bankruptcy until you have passed a mandatory two year waiting period after a Chapter 7 Bankruptcy discharged date. Mortgage lenders will want to see re-established credit after the Chapter 7 Bankruptcy discharged date and no late payments after a bankruptcy. Majority of mortgage lenders will not accept any mortgage borrowers who had any late payments after a Chapter 7 Bankruptcy or any borrowers who had late payments during and/or after a Chapter 13 Bankruptcy. There is no waiting period to qualify for a FHA Loan after a Chapter 13 Bankruptcy discharged date, however, most FHA mortgage lenders will have a two year waiting period after a Chapter 13 Bankruptcy discharged date as part of their overlays. Under no circumstances be late on any debt payments after a bankruptcy and/or foreclosure. Again, any late payments after a bankruptcy and/or foreclosure may ruin your chances of qualifying for a mortgage loan. If you have any late payments after a bankruptcy and/or foreclosure and are told that you do not qualify for a FHA Loan, feel free to contact me at 262-716-8151 or email me at gcho@gustancho.com and I will see if there is any way that me and/or my associates can help you.

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.

Comments are closed.