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In a Chapter 13 for 2.5 years, 655 Credit, W2-Only No Tax Return Mortgage
I am in a repayment plan on a Chapter 13 Bankruptcy for 2.5 years, 655 credit, w2s only no tax returns. Can I qualify for a mortgage and buy a house while I am still in a five year Chapter 13 Bankruptcy repayment plan.
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1 Reply
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Yes, in a Chapter 13 bankruptcy repayment plan, you can qualify for a mortgage and buy a house. However, certain requirements must be met:
Main Requirements:
Approval by Trustee and Court:
To incur new debts like a mortgage during bankruptcy, you need permission from the trustee of Chapter 13 and the court. To do this, you must file an application with the court explaining why such a loan is needed and how it fits into your payment plan.
Payment history:
For lenders to consider giving you a mortgage, they typically require between 12 and 24 months of on-time repayment towards a bankruptcy plan. It’s positive that you have made 2.5 years’ worth of payments on time.
Credit score:
With a credit score 655, certain loan programs may be available to you, including FHA loans. These loans have less strict policies regarding scores and are very popular among borrowers who have filed for Chapter thirteen bankruptcy.
Type of Loan:
FHA Loan: You will have better luck getting approved for this type since they’re more lenient with their rules about credit scores and past bankruptcy. The minimum requirement for an FHA loan is usually around 580, so even though yours could be better, at least it’s within range.
VA Loan: If you’re a veteran, VA Loans might work better because they don’t care too much about what happened before filing bankruptcy.
Conventional Loan: Most conventional lenders will only touch people two years after discharge, but if presented properly during Chapter 13 proceedings, some might consider extenuating circumstances.
W2 Income Only (No Tax Returns):
This is for individuals without tax returns but having W-2 income. Mortgage lenders could still pass, particularly if the loan is an FHA or VA, where income verification methods are more flexible.
Steps to Take:
Consult Your Bankruptcy Attorney: Before taking action to secure yourself housing through a mortgage, In contrast to chapter thirteen, consult with your lawyer first so that he or she can advise on how best to approach the court approval process.
Work With An Experienced Lender: Find a lender who has dealt with borrowers under Chapter 13 bankruptcies before because they will know what to do and push for at each stage. They should be able to help you through the whole thing and ensure all necessary papers are filed on time.
Get Ready For Documentation: Have everything ready, such as W2 forms and recent pay slips, among others, which show that even though one is still paying off debts, one can still afford mortgage payments.
Having paid consistently for two and half years, coupled with having a credit score of 655 plus being employed officially (W-2 income). It puts you in good stead when seeking mortgages during the repaying period under chapter thirteen. The most important thing is getting approvals from courts or trustees required by law while dealing with lenders having experience in these matters.