Qualifying For Home Loan After Chapter 13 Bankruptcy

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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 during their repayment plan. There is no waiting period to qualify for home loan after Chapter 13 Bankruptcy discharged date. Many lenders mandatory waiting period requirements after Chapter 13 Bankruptcy Discharge Date due to their own lender overlays.

  • 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
  • HUD sets the mortgage guidelines during and after Chapter 13 Bankruptcy
  • Fannie Mae and/or Freddie Mac is in charge of setting up mortgage 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 During And After Bankruptcy

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 Bankruptcy Trustee
  • This holds true 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
  • Timely payment to creditors and in good standings is mandatory

Waiting Period Requirements By Lenders

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 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

Manual Underwriting Mortgage Guidelines

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
  • VOR Form is provided by lender to the property management company
  • Completed VOR by property manager can be used in lieu of 12 months canceled checks and/or 12 months bank statements
  • A VOR form will be provided by lender to the property manager of the property management company
  • Needs to be completely filled out, signed, dated, and stamped by the property manager

Qualifying For Home Loan After Chapter 13 Bankruptcy On 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
  • 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.

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
  • Not the recorded date of your foreclosure
  • The foreclosure can be recorded at a much later date
  • 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
  • The mortgage cannot be reaffirmed
  • 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

Home buyers with 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 us at Gustan Cho Associates at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or email us 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.

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