Qualifying For Home Loan After Chapter 13 Bankruptcy

Is There A Mandatory Period To Qualifying For Home Loan After Chapter 13 Bankruptcy?

Home Buyers looking in Qualifying For Home Loan After Chapter 13 Bankruptcy can do so after meeting the mandatory waiting period after Chapter 13 Bankruptcy Discharge Date. HUD, the parent of the Federal Housing Administration or commonly known by many as FHA, has different rules and guidelines in qualifying for home loan after Chapter 13 Bankruptcy than Fannie Mae and/or Freddie Mac who is in charge of setting up mortgage lending guidelines on conventional loans. We will be discuss the rules and regulations in qualifying for home loan after Chapter 13 Bankruptcy for FHA Loans and Conventional Loans on this blog.

Qualifying For Home Loan After Chapter 13 Bankruptcy: FHA Loans

Qualifying For Home Loan After Chapter 13 Bankruptcy with FHA Loans is much easier than it is for Qualifying For Home Loan After Chapter 13 Bankruptcy with Conventional Loans. With FHA, a home buyer can actually qualify for a FHA Loan one year into the Chapter 13 Bankruptcy Repayment Plan with the approval of the Chapter 13 Bankruptcy Trustee as long as the home buyer can provide 12 months of timely payments to his or her creditors and that the Chapter 13 Bankruptcy Repayment to their creditors has been timely and in good standings.

FHA has no waiting period after a Chapter 13 Bankruptcy discharge date to qualify for a 3.5% down payment home purchase FHA insured home loan.  Minimum credit scores required for a 3.5% down payment home purchase FHA Loan is 580 FICO credit scores. FHA borrowers with under 580 FICO Credit Scores can qualify for a FHA Loan but any FHA borrowers with credit scores between 500 FICO and 579 FICO credit scores, 10% down payment is required on a home purchase. To be eligible for a 3.5% down payment FHA home purchase loan, the borrower needs a credit score of at least 580 FICO.

Qualifying For Home Loan After Chapter 13 Bankruptcy with FHA Loans are all manual underwriting if the Chapter 13 Bankruptcy has been seasoned for under 2 years from the Chapter 13 Bankruptcy discharged date. Manual Underwriting Guidelines require verification of rent which is rental payments made to the landlord for the past 12 months. The only way verification of rent is valid is by providing 12 months canceled checks which has been paid to the landlord. Cash payment to the landlord and a paid receipt by the landlord is not valid and cannot be used to document rental verification. Online payments to the landlord’s bank account by the renter can be used a verification of rent in lieu of 12 months canceled checks. If the renter is renting from a registered property management company, then a VOR, verification of rent, can be done by the property manager of the property management company in lieu of 12 months canceled checks and/or 12 months bank statements. A VOR form will be provided by the mortgage lender to the property manager of the property management company and needs to be completely filled out, signed, dated, and stamped by the property manager.

Qualifying For Home Loan After Chapter 13 Bankruptcy: Conventional Loans

Home Buyers can qualify for a conventional loan after Chapter 13 Bankruptcy two years from the discharged date of the Chapter 13 Bankruptcy. There is a four year waiting period after a Chapter 7 Bankruptcy discharged date to qualify for a conventional loan. No late payments during and after the Chapter 13 Bankruptcy discharged date is required in qualifying for home loan after Chapter 13 Bankruptcy and mortgage lenders do want to see re-established credit after Chapter 13 Bankruptcy . Most people do not want anything to do with credit after a Chapter 13 Bankruptcy discharge, however, not having any credit after a Bankruptcy and/or Foreclosure is not wise and not viewed favorably by mortgage lenders and other creditors.

To qualify for a conventional loan, the borrower needs a minimum of a 620 FICO credit score. The maximum debt to income ratio on conventional loans cannot be greater than 45% DTI which is much less than the maximum FHA debt to income ratio requirements of 56.9% DTI.

New Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

Great news for home buyers who had a mortgage or mortgages part of their Chapter 7 Bankruptcy . If you had a mortgage as part of your Chapter 7 Bankruptcy, there is a four year waiting period from the date of your Chapter 7 Bankruptcy discharged date and not the recorded date of your foreclosure. The foreclosure can be recorded at a much later date and the date of the foreclosure that is reflected either by the date of the sheriff’s sale and/or the recorded date of the transferred deed that is recorded on public records. This is not the case with FHA. With FHA, if you had a mortgage part of a Chapter 7 Bankruptcy, there is a three year mandatory waiting period after date of the sheriff’s sale and/or date when the deed of the home was transferred out of your name into the name of the lender. The discharged date of the Chapter 7 Bankruptcy does not matter. There are times when someone has a mortgage part of bankruptcy but the foreclosure does not transfer names until years after the Chapter 7 Bankruptcy discharged date.

If you have a prior Chapter 13 Bankruptcy discharge and need help qualifying for home loan after Chapter 13 Bankruptcy, whether you are looking for a FHA Loan or Conventional Loan, please contact me at 262-716-8151 or email me at gcho@gustancho.com. I am available 7 days a week, evenings, weekends, and holidays to take your phone calls or emails and answer all of your questions.

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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