What Are My Mortgage Options After Filing Bankruptcy In 2022

In this article, we will discuss and cover a FAQ on what are my mortgage options after filing bankruptcy. We will also cover the automated underwriting system (AUS) and manual underwriting guidelines on FHA and VA loan approvals. Mortgage loan applicants can get loan approvals with credit scores down to 500 FICO on FHA and VA loans with an approve/eligible per AUS or if they are eligible for manual underwriting.

What Are My Mortgage Options After Filing Bankruptcy In 2022? FHA and VA Loan 12 Months After Filing for Bankruptcy

What Are My Mortgage Options After Filing Bankruptcy In 2022? FHA and VA Loan 12 Months After Filing for Bankruptcy

FHA and VA loans are the only two mortgage loan programs that allow manual underwriting on home loans. Many people think they can not get a mortgage with bankruptcy. When asked what are my mortgage options after filing bankruptcy in 2022, the soonest loan program borrowers can qualify for are FHA and VA loans. You can qualify for an FHA or VA loan one year into the repayment program with trustee approval.  Non-QM lenders often require bankruptcy discharge.

What Are My Mortgage Options After Filing Bankruptcy | Manual Underwriting? 

No other mortgage loan programs allow manual underwriting. However, the key in getting an approve/eligible per automated underwriting system (AUS) approval on lower credit scores is to have been timely on all monthly payments in the past 12 months. Manual underwriting guidelines are exactly the same on FHA and VA loans. Borrowers who cannot get an approve/eligible per AUS and get a refer/eligible per AUS are eligible to qualify for manual underwriting on FHA and VA loans. Borrowers need to have been timely with all of their monthly payments in the past 24 months to be eligible for manual underwriting.

What Are My Mortgage Options After Filing Bankruptcy | Agency Guidelines on Government and Conforming Loans

One of the most important things borrowers with lower credit scores and prior bad credit need to understand is agency guidelines versus lender overlays. Agency mortgage guidelines are the minimum lending requirements by the individual mortgage agency such as HUD, the VA, USDA, Fannie Mae, Freddie Mac. This is what determines whether or not borrowers qualify for a home mortgage per the individual agency on FHA, VA, USDA, and Conventional loans.

What Are My Mortgage Options After Filing Bankruptcy on Lenient Lenders on Credit Requirements On FHA And VA Loans

What Are My Mortgage Options After Filing Bankruptcy on Lenient Lenders on Credit Requirements On FHA And VA Loans

Mortgage companies can have additional lending requirements that are above and beyond the minimum agency guidelines of HUD, VA, USDA, Fannie Mae, Freddie Mac. These additional lending requirements are called lender overlays. Mortgage companies can have lender overlays on just about anything and everything.

What Are My Mortgage Options After Filing Bankruptcy on Finding a Lender with No Overlays

Typical overlays include lender overlays on credit scores, outstanding collections, charged-off accounts, and debt to income ratio. Not every mortgage lender has the same kind of overlay. For example, one lender may have a credit score overlay of 620 while another lender will have a credit score overlay of 640. Therefore, it is very important to understand the minimum agency guidelines on FHA and VA loans versus what a lender may tell you what their minimum credit score requirements are. Gustan Cho Associates has a no lender overlay business model on government and conforming loans.

Mortgage Broker Licensed in 48 States With Over 170 Wholesale Lenders

Gustan Cho Associates is one of the very few mortgage brokers licensed in multiple states with a business model of no lender overlays on government and conventional loans. Gustan Cho Associates has over 170 wholesale mortgage lending partnership agreements. We have every mortgage loan product you can think of. Over 75% of our borrowers are folks who could not qualify at other mortgage companies. We will explain in detail what lender overlays are in the following paragraphs.

What Are Lender Overlays on Government and Conforming Loans?

FHA/VA 500 FICO

Most mortgage companies have lender overlays on government and conventional loans. Gustan Cho Associates was founded on the mission and philosophy of being able to originate and close loans other lenders cannot due to its no lender overlays policy. GCA Mortgage strives to honor our no-lender overlay policy on government and conventional loans. This holds especially true with FHA and VA loans.

Mortgage One Day Out of Bankruptcy and Housing Event

Gustan Cho Associates has a national reputation for being able to do loans other lenders cannot do. Over 75% of our borrowers are folks who could not qualify at other lenders. We are experts in helping homebuyers qualify for a mortgage during or after bankruptcy. GCA Mortgage has a unique loan program where homebuyers can purchase a home one day out of bankruptcy and/or a housing event. A housing event is one of the following:

  • Foreclosure
  • Deed in lieu of foreclosure
  • Short-sale
  • Mortgage included in bankruptcy

Gustan Cho Associates is one of the very few lenders in the country that consistently originate and close FHA and VA loans with lower credit scores. Most mortgage companies will require a minimum credit score of 620 to 640 FICO on FHA and VA loans. This holds true even though HUD, the parent of FHA, allows borrowers with credit scores down to 500 FICO to qualify for FHA loans.

FHA And VA Guidelines Comparison To Individual Lender Overlays

VA loans do not have a minimum credit score requirement. Although the agency minimum mortgage guidelines from HUD and the Veterans Administration allow borrowers with credit scores down to a 500 to qualify for an FHA and/or VA loan, most lenders will not honor borrowers with such low scores due to their lender overlays.

Best Lenders For Bad Credit

GCA Mortgage has zero lender overlays on government and conventional loans. We have no lender overlays on FHA and VA loans. We just go off the minimum agency guidelines on HUD and VA on FHA and VA loans. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other mortgage companies. The main reason why borrowers could not qualify at other lenders and come to GCA Mortgage is due to lender overlays. The bottom line is not all lenders have the same mortgage lending requirements on FHA and VA loans. Most lenders require you to meet the minimum agency guidelines but will also require higher lending standards.

What Are My Mortgage Options After Filing Bankruptcy With Low Credit Scores?

To qualify for a 3.5% down payment FHA loan, the borrower needs at least a 580 credit score. HUD, the parent of FHA, allows borrowers to qualify for an FHA loan with a minimum credit score down to a 500 FICO. Under HUD Agency Guidelines, borrowers with under 580 credit scores need at least a 10% down payment. Therefore, if you have a 500 credit score and need to qualify for an FHA loan, you would need to put a 10% versus a 3.5% down payment on a home purchase.

What Are My Mortgage Options After Filing Bankruptcy With Bad Credit in 2022

VA loans do not have a minimum requirement. GCA Mortgage has approved countless borrowers with credit scores down to 500 FICO on VA loans. On VA loans, whatever the credit score of the borrower is, there is no down payment required. VA does not have a maximum debt to income ratio cap. As long as you get sufficient residual income and timely payments in the past 12 months, the chances are in your favor in getting an approve/eligible per automated underwriting system.

What Are My Mortgage Options After Filing Bankruptcy and Low Credit Scores

You can have prior bad credit and qualify for an FHA and/or VA loan. The key here is the word PRIOR. Both HUD and the Veterans Administration understand people can have gone through a difficult time. However, you need to have recovered, rebuilt, and reestablished your credit. Mortgage agencies will frown upon any late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. This also holds true on having any late payments after a period of bad credit.

What Are My Mortgage Options After Filing Bankruptcy? FHA and VA Loans

Borrowers can qualify for FHA and VA loans with bad credit. Gustan Cho Associates does not require outstanding collections accounts to be paid in order to qualify for a mortgage. Charged-off accounts do not have to be paid. The most important factor we do require is timely payments in the past 12 months.

Answer To What Are My Mortgage Options After Filing Bankruptcy is FHA and VA Loans

Answer To What Are My Mortgage Options After Filing Bankruptcy is FHA and VA Loans

FHA and VA loans are the only two loan programs that allow manual underwriting. The answer to the FAQ is what are my mortgage options after filing bankruptcy is FHA and VA loans. You can qualify for an FHA or VA loan one year after filing bankruptcy.  No late payments after filing bankruptcy. Timely payments on all debts post Chapter 13 Bankruptcy. Again, prior bad credit is acceptable. However, timely payments in the past 12 months are key in getting an approve/eligible per AUS with lower credit scores. Manual underwriting normally requires 24 months of timely payments.

What Are My Mortgage Options After Filing Bankruptcy? Manual Underwriting on FHA And VA Loans

Other qualifications to qualify for an FHA and/or VA loan with lower credit scores and/or prior bad credit are the following:

  • Get an approve/eligible per automated underwriting system
  • If you cannot get an AUS Approval and get a refer/eligible per AUS, you may qualify to be eligible for a manual underwrite
  • Manual underwriting guidelines apply
  • Gustan Cho Associates does manual underwriting on FHA and VA loans
  • FHA and VA manual underwriting guidelines are very similar and almost identical
  • In general, you need timely payments on all of your payments for the past two years to meet FHA and VA manual underwriting guidelines
  • Verification of rent is generally required on all manual underwriting
  • You can have outstanding collections and charged-off accounts and not have to pay them off and qualify for FHA and/or VA loans

If you have lower credit scores and prior bad credit and need to qualify for an FHA/VA Loans 500 FICO, please contact us at Gustan Cho Associates. GCA Mortgage is a mortgage company licensed in multiple states with no lender overlays on FHA and VA loans. Over 75% of our borrowers are folks who could not qualify at other lenders. If GCA Mortgage cannot approve lower credit score borrowers, nobody can. Please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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