VA-FHA Chapter 13 Mortgage Guidelines On VA And FHA Loans

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VA-FHA Chapter 13 Mortgage Guidelines On VA And FHA Loans

This BLOG On VA-FHA Chapter 13 Mortgage Guidelines On VA And FHA Loans Was PUBLISHED On July 11th, 2019

VA-FHA Chapter 13 Mortgage Guidelines
Gustan Cho Associates

Filing bankruptcy today is very common and more accepted in society.

  • After the 2008 Housing Bubble Crash and Credit Meltdown, bankruptcy has become more or a household word
  • Countless of Americans lost their jobs, homes, investments, businesses, equity, and had to file for bankruptcy
  • Millions of Americans filed bankruptcy to wipe out old debts they could no longer pay
  • The economy eventually recovered and so have many who filed bankruptcy
  • VA-FHA Chapter 13 Mortgage Guidelines allow borrowers to qualify for VA and/or FHA Loans during a Chapter 13 Bankruptcy Repayment Plan
  • Borrowers need to be in the repayment of their Chapter 13 Bankruptcy for at least 12 months to qualify
  • It also needs to be manually underwritten
  • There is no waiting period after a Chapter 13 Bankruptcy discharge date
  • Any bankruptcies without two-year of seasoning after the discharge date needs to be manually underwritten
  • In this blog, we will discuss VA-FHA Chapter 13 Mortgage Guidelines

VA and FHA Loans are the only two loan program that allows borrowers to qualify for home loans during Chapter 13 Bankruptcy repayment plan and there is no waiting period after discharge.

Benefits Of Filing Bankruptcy

Benefits Of Filing Bankruptcy

Bankruptcy is a consumer’s right to protect themselves by creditors and gives them a chance of discharging their debts and/or reorganizing their finances. It is a federal law.

  • Consumers can qualify for a mortgage and have a chance to become property owners again after bankruptcy
  • Government and conventional loans require a minimum waiting period requirement after bankruptcy
  • However, Gustan Cho Associates offers nonQM loanswhere there are no minimum waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • Debt collectors can no longer come after you after filing bankruptcy

Bankruptcy is not the end of the world. Actually, it is the opposite. It gives consumers a fresh start in life. Consumers can start re-establishing their credit right after their bankruptcy discharge.

Credit Scores After Filing Bankruptcy

Credit Scores After Filing Bankruptcy

According to a New York Federal Reserve Bank study, consumers filing bankruptcy often learn from their past debt problems and are better off after their discharge.

  • There are many folks who have 700 plus FICO credit scores one year after filing bankruptcy
  • There are no more debts that will be hounding consumers after bankruptcy
  • Filing bankruptcy will have an immediate harsh impact on consumer credit scores
  • A drop of 100 plus FICO points is not unheard of once a consumer files bankruptcy
  • However, as the bankruptcy ages, consumer credit scores will gradually increase

As consumers add credit tradelines such as secured credit cards, this will expedite the increase of credit scores.

Difference Between Chapter 7 Versus Chapter 13 Bankruptcy

Difference Between Chapter 7 Versus Chapter 13 Bankruptcy

Chapter 7 Bankruptcy is also called total liquidation. Borrowers without jobs or reduced income with little to no assets can qualify for Chapter 7 Bankruptcy.

  • It takes about 90 days for discharge after filing Chapter 7 Bankruptcy
  • Any assets consumers have will be liquidated by the Bankruptcy Trustee and paid to creditors in a Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy is a court ordered a repayment plan
  • Consumers need to have a full-time job to qualify for Chapter 13 Bankruptcy
  • A percentage of the consumer’s income is allocated every month to pay creditors
  • Most plans last 3 to 5 years
  • After the end of the repayment terms, the remaining debts get discharged and the consumer is no longer obligated on any of their debts

Home buyers can qualify for home loans after Chapter 7 bankruptcy after meeting the mandatory meeting period. Home buyers can qualify for FHA and VA Loans during and after Chapter 13 bankruptcy. VA-FHA Chapter 13 Mortgage Guidelines are exactly the same.

VA-FHA Chapter 13 Mortgage Guidelines On VA And FHA Loans

There is a two year waiting period after Chapter 7 Bankruptcy discharge date to qualify for VA and FHA Loans. USDA requires a three-year waiting period. Fannie Mae and Freddie Mac require a four year waiting period to qualify for conventional loans after a Chapter 7 Bankruptcy. VA-FHA Chapter 13 Mortgage Guidelines are exactly the same. VA-FHA Chapter 13 Mortgage Guidelines to qualify for home loans during and after Chapter 13 Bankruptcy are as follows:

  • Borrowers can qualify for VA and/or FHA Loans during Chapter 13 Bankruptcy repayment plan one year into the plan
  • Chapter 13 Bankruptcy does not have to be discharged
  • Trustee approval is required
  • Needs to be manual underwriting
  • There is no waiting period after Chapter 13 Bankruptcy discharge date
  • Any Chapter 13 Bankruptcy discharge that has not been seasoned at least two years needs to be manually underwritten
  • There is a two-year waiting period to qualify for conventional loans after Chapter 13 Bankruptcy discharged date
  • There is a four-year waiting period to qualify for conventional loans after Chapter 13 Bankruptcy dismissal date

Not too many lenders will do a manual underwrite on VA and/or FHA Loans. Gustan Cho Associates at Loan Cabin Inc. are one of the very few national lenders that does manual underwriting on VA-FHA Home Loans. Borrowers who need to qualify for VA-FHA Chapter 13 Mortgage Loans with a direct lender with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

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