HUD Chapter 13 Guidelines on FHA Loans

This article will cover HUD Chapter 13 Guidelines for FHA loans. Mortgage Bad Credit Lenders is a mortgage company licensed in multiple states with a network of 210 wholesale lenders.

Mortgage Lenders For Bad Credit has a national reputation for being able to do loans other lenders cannot do due to our no-lender overlays on government and conventional loan business models. We have hundreds of non-prime and alternative mortgage loan options for owner-occupant, second homes, and investment properties.

FHA and VA loans are the only two loan programs that allow homebuyers and homeowners to purchase or refinance mortgages during the Chapter 13 Bankruptcy repayment plan with bankruptcy approval. Mortgage Lenders For Bad Credit are mortgage brokers and correspondent lenders with 210 lending partners, including non-QM and alternative wholesale lending investors.

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HUD Chapter 13 Guidelines For FHA Loans

The Mortgage Lenders For Bad Credit team is licensed in multiple states with no lender overlays on government and conventional loans. GCA Mortgage has a national reputation for being able to originate and fund government and conventional loans other lenders cannot. Mortgage Lenders For Bad Credit is a correspondent lender and mortgage broker. This is why we are often referred to as a one-stop shop. If Mortgage Lenders For Bad Credit does not have the mortgage loan program you are looking for, no other lender will have it.

FHA Loans During and after chapter 13 Bankruptcy

Mortgage Lenders For Bad Credit is widely known for being able to help borrowers get qualified and approved for a home mortgage during the Chapter 13 Bankruptcy repayment plan. The bankruptcy does not need to get discharged to get a home mortgage during the Chapter 13 Bankruptcy repayment plan. Bankruptcy trustee approval is required. However, no need to worry. Many borrowers fear bankruptcy trustees will not sign off on a mortgage. This is not the case:

Out of thousands of Chapter 13 Bankruptcy FHA or VA loans we have qualified and approved, we have never had a bankruptcy trustee not approve a home mortgage and purchase during the Chapter 13 Bankruptcy repayment plan.

Mortgage Lenders For Bad Credit can help borrowers in an active Chapter 13 Bankruptcy repayment plan help bankruptcy trustee approval. Over 80% of Mortgage Lenders For Bad Credit borrowers could not qualify at other lenders due to lender overlays.

Qualifying For A Mortgage After Bankruptcy and Foreclosure

You can qualify for a mortgage during and after bankruptcy. However, there are mandatory waiting period requirements after bankruptcy on government and conventional loans. The waiting period and lending guidelines are different between Chapter 7 versus Chapter 13 bankruptcy. GCA Mortgage offers non-QM loans after bankruptcy or foreclosure with no waiting period requirements with a 30% down payment.

There is no waiting period after bankruptcy or a housing event if you have a 30% down payment on a home purchase or at least a 70% loan to value your home if you want to refinance. However, non-QM lenders require bankruptcies to be discharged and will not do a Chapter 13 repayment borrower without the Chapter 13 Bankruptcy being discharged. Many people recover sooner than others after bankruptcy or foreclosure. The team at Mortgage Lenders For Bad Credit has helped thousands of folks get credit scores to over 700 FICO in less than one year after the Chapter 7 Bankruptcy discharge date.

Difference Between Chapter 7 Versus Chapter 13 Bankruptcy

The two most common types of bankruptcies in the United States are the following:

Chapter 7 Bankruptcy
Chapter 13 Bankruptcy

Chapter 7 Bankruptcy is the bankruptcy of choice. The bankruptcy gets discharged 90 days after filing. Chapter 7 Bankruptcy is called total liquidation bankruptcy, and there is an income cap. Check the Chapter 7 Bankruptcy means test to see if you qualify for the Chapter 7 Bankruptcy income cap. Chapter 7 Bankruptcy benefits borrowers who are not employed or have little to no income with a job that is not stable. It also benefits borrowers who own little to no assets.

Consumers with assets and full-time good-paying jobs drowning in debt can file for Chapter 13 Bankruptcy. Filing Chapter 13 Bankruptcy protects the petitioner’s assets from repossession. Chapter 13 Bankruptcy is called debt restructuring over five years. A bankruptcy trustee is assigned to the petitioner. A percentage of the person’s gross monthly income is set aside to pay the creditors. The monthly payments are distributed among the filer’s creditors for normally five years or 60 months.

Terms can range anywhere between 36 to 60 months. People who file Chapter 13 Bankruptcy can qualify for an FHA or VA loan after the petitioner makes 12 timely monthly payments. It needs to be manual underwriting. Only FHA and VA loans allow manual underwriting. The VA and FHA Agency Manual Mortgage Guidelines are the same.

Qualifying For Chapter 13 Bankruptcy Mortgage Loan Programs During And After Bankruptcy

FHA and VA loans are the only two loan programs that allow borrowers to qualify for a mortgage while in the Chapter 13 Repayment plan. There are no waiting period requirements on FHA and VA loans after the Chapter 13 Bankruptcy discharge date under manual underwriting.

After the petitioner successfully pays their creditors for the term, the balance of the debts gets discharged. A bankruptcy discharge means all remaining debts owed to creditors by the petitioner are discharged and no longer have to be paid. The petitioner is now debt-free, restarted, and rebuilding their financial life from ground zero. There are no waiting period requirements by mortgage borrowers after the Chapter 13 Bankruptcy discharge date to qualify for an FHA or VA loan.

If you want to qualify for an FHA or VA loan after the Chapter 13 Bankruptcy discharge date and the discharge has been seasoned for less than 24 months, it needs to be a manual underwrite. You will not get an approve/eligible per automated underwriting system without having it seasoned for two years after the Chapter 13 Bankruptcy discharge date. No other loan programs other than FHA or VA loans will allow borrowers to qualify for a mortgage while in the Chapter 13 Bankruptcy repayment plan.

Fannie Mae and Freddie Mac require a two-year waiting period requirement after the Chapter 13 Bankruptcy discharge date and a four-year waiting period after the Chapter 13 Bankruptcy dismissal date. USDA loans do not allow borrowers to qualify for a USDA loan during the Chapter 13 bankruptcy repayment plan. The three-year waiting period is three years to qualify for a USDA loan after the Chapter 13 and Chapter 7 Bankruptcy discharge dates.

Buying Out Chapter 13 Bankruptcy Early

Mortgage borrowers can qualify for an FHA or VA loan on home purchase and refinance mortgage transactions while in an active Chapter 13 Bankruptcy repayment plan. Trustee approval is not a problem. Mortgage Lenders For Bad Credit have qualified, approved, originated, and closed tens of thousands of FHA or VA loans while in a Chapter 13 Bankruptcy repayment plan. We had no issue with the bankruptcy trustee not approving a home purchase or a refinance transaction while in the Chapter 13 repayment plan. Dale Elenteny of Mortgage Lenders For Bad Credit explains how many homeowners are doing a Chapter 13 cash-out refinance buyout:

In the past few years, many homeowners have built tens of thousands of equity during the hot, booming housing market. Home prices have skyrocketed double digits year after year. The housing boom is expected to continue due to the coronavirus remote job opportunities available throughout the nation and the historic record-low mortgage rates. Many homeowners have plenty of home equity to do a cash-out refinance on an FHA or VA loan. Trustee approval will be required.

Our Mortgage Lenders For Bad Credit team can quarterback the trustee approval if your bankruptcy attorney is unfamiliar with the process. The bankruptcy trustee’s role is to research and ensure the home mortgage is not fraudulent. Bankruptcy trustees will approve a significant cash-out refinance if the petitioner intends to do a Chapter 13 Buyout to end the Chapter 13 Bankruptcy term earlier than the five-year term.

Starting The Mortgage Process While In Chapter 13 Bankruptcy

You have come to the right place at Mortgage Lenders For Bad Credit to qualify for a mortgage during or after Chapter 13 Bankruptcy. The first step is to contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The Mortgage Lenders For Bad Credit team is available seven days a week, evenings, weekends, and holidays.

Mortgage Lenders For Bad Credit will assign our client to one of our experienced veteran loan officer associates. Your assigned loan officer will analyze and evaluate your situation and the best loan program suited to you while in Chapter 13 Bankruptcy. We will thoroughly review your mortgage loan application, tri-merger credit report, and payment history while in the Chapter 13 Bankruptcy repayment plan. We will fully qualify and pre-approve you and go over the terms of your mortgage loan and your ability to repay.

We will review all the documents you have provided, such as your W2s, income tax returns, asset information, and bankruptcy paperwork. After we find you qualified and pre-approved, we will issue a solid pre-approval letter. Mortgage Lenders For Bad Credit has a stellar closing ratio on our pre-approved borrowers coming to the closing table. At 100% is not bad. Mortgage Lenders of Bad Credit have a national reputation for being able to do loans other lenders cannot. Over 80% of our borrowers could not qualify at other lenders due to that lender’s overlays.