[Tom Miller]

Hi,

Thank you for getting in touch and giving us a clear overview of your situation.

Based on what you’ve told us, we should take a closer look at your situation. A credit score around 610 and your wife’s recent dental practice purchase don’t disqualify you, but with a $2.1 million price and a 20% down payment, it’s important to review your finances together. This way, we can find the best loan option for you, whether that’s a large loan, a special bank loan, or an alternative loan.

Dental Practice Income

For loan approval, the main thing will be showing your wife’s income from the dental practice she recently bought.

Since the purchase happened on January 23, 2026, there may not be a full year of business records under your wife’s name yet. That’s okay. The key is to show a steady, reliable income and find a loan that accommodates a shorter ownership period.

You mentioned several positive points that are worth looking into further:

• Your wife is remaining in the same profession as a dentist.
• She acquired an established dental practice rather than launching a new business from scratch.
• The practice has reportedly been operating for roughly 50 years.
• The prior owner remains involved with the practice.
• Current performance is reportedly stronger than in prior years.
• You have high W-2 income.
• You intend to put at least 20% down on a primary residence.

No single factor guarantees approval, but all these strengths together make a strong case for moving forward. The practice’s history, your wife’s experience, the details of the purchase, and recent income trends all help your application. Before you spend money on appraisals or outside reports, let our team review your income, assets, credit, and the loan structure you have in mind.

Please be prepared to provide:

• Your most recent W-2s and pay stubs.
• Most recent personal bank statements.
• Most recent business bank statements for the dental practice.
• Documentation related to the dental practice acquisition, including the purchase agreement, financing documents, and final statement if available.
• A year-to-date profit-and-loss statement for the practice.
• A current balance sheet, if available.
• Historical financial information for the dental practice before your wife’s acquisition, if available.
• Documentation of your wife’s employment, income, licensing, and history as a dentist before acquiring the practice.
• A current mortgage credit report.
• The purchase contract, if executed.
• Documentation of funds available for the down payment, closing costs, and required reserves.
• Information on all existing personal and business debts, including any practice acquisition financing.

Based on the documents you send, we can explore large loans, special bank loans, alternative loans, bank statement loans, profit-and-loss loans, or other flexible options. Our goal is to find a solution that fits your situation, not just follow standard rules.

A credit score of 610 needs a careful review, especially with the price and loan amount you’re considering.

This score doesn’t automatically stop the deal. However, it will probably limit your loan options and may affect the following things:

• Required down payment.
• Reserve requirements.
• Interest rate and pricing.
• Maximum loan amount.
• Debt-to-income tolerance.
• Whether an exception or a portfolio lender is necessary.

It helps to know what’s affecting your credit score, such as late payments, credit usage, collections, recent checks, or high balances. A full credit report gives more details than just the score. For a purchase of about $2.1 million, approval will depend on the overall strength of your credit, income, savings, reserves, debts, and the documents we can provide for the dental practice.

Final Timeline

Closing in 30 to 45 days may be possible, but we’ll need to complete our first review and select the right loan option before we can confirm the timeline.

For large or alternative loans, especially for new business owners, it’s best to find the right loan option from the start. This way, you can avoid surprises later if a loan is denied after property checks or other approval steps.

Please send us the main documents first. After we review them, we’ll let you know if there’s a good financing path and which options make the most sense, before you spend more or commit further.

Your situation is a good example of why it’s important to look beyond credit scores and standard rules to find the best outcome.

Thank you for sharing your scenario on the GCA Mortgage Forums.

[Tom Miller]

Mortgage rates are likely to go up in October 2026 as long-term bond yields increase. Rising energy prices and investors seeking higher returns on U.S. debt are fueling inflation worries. As a result, lenders are changing the prices of mortgage-backed securities. While the Federal Reserve affects overall interest rates, it does not directly control 30-year mortgage rates.

Recent Trends in Mortgage Rates.

For the week ending October 1, Freddie Mac reported that the average 30-year fixed mortgage rate was 7.28 percent, up from 7.03 percent the week before and the highest since late 2023. Mortgage rates can change every day. For instance, Mortgage News Daily listed a top 30-year fixed rate of about 7.57 percent on October 2. These shifts highlight why it is important to pay attention to the real rates lenders offer, not just weekly averages.

Primary Determinants of Mortgage Rate Movements

• Yields on 10-year Treasury bonds have gone up quickly. Mortgage rates usually track longer-term Treasury yields, especially the 10-year bond, rather than the federal funds rate. On October 1, the 10-year yield rose to about 5.34 percent, much higher than in late February. When Treasury prices drop and yields go up, mortgage-backed securities need to offer higher yields to attract investors. Concerns about inflation are growing. Ongoing conflict in the Middle East and global tensions are pushing up oil, gasoline, and diesel prices, which raises transportation, production, and household costs. Because of this, investors want higher returns to protect their money from inflation.
• In September, the Federal Reserve raised its policy rate by 0.25 percent to a range of 3.75 to 4.00 percent. While the Fed does not directly set mortgage rates, this move signals ongoing inflation concerns and keeps financial conditions tight, which in turn affects other interest rates. Many companies, including those in the artificial intelligence sector, are borrowing more. Because of uncertainty about future inflation, investors demand higher returns on long-term loans, pushing up long-term yields and mortgage rates. Mortgage rates are not just a fixed amount added to the 10-year Treasury yield; lenders also consider yields on mortgage-backed securities (MBS). The gap between MBS and Treasury yields can get bigger during market swings or when fewer people want mortgages, causing mortgage rates to rise even if other bond signals look positive. For example, if job data shows the economy is slowing, yields might fall as the Fed is less likely to raise rates. But on October 2, bonds lost early gains as oil prices rose and investors focused on job reports and global bond markets. When the bond rally ended, lenders quickly raised rates.

Potential Catalysts for Mortgage Rate Declines

For mortgage rates to drop and stay low, several things would probably need to get better at the same time:

1. Inflation, particularly that associated with energy prices, would need to decline and remain subdued.
2. Lower oil and fuel prices would depend on easing global conflicts. The risk of sudden shocks could also decline if inflation expectations and the extra costs of long-term loans fall, or if mortgage-backed securities help close the gap with Treasury bond yields. If the job market weakens, financial markets might expect the Federal Reserve to pause further rate hikes.

It is important to remember that simply waiting for the Federal Reserve to lower interest rates may not be enough. The bond market often reacts before official policy changes, as seen in Treasury yields, mortgage-backed security prices, inflation data, energy prices, and interest rates. Recent forecasts expected rates to stay near 7 percent for the rest of 2026, but these predictions were made before the bond market rally at the end of September.

• This reply was modified 1 day, 1 hour ago by  Sapna Sharma.

[Tom Miller]

Village Capital & Investment, nestled in Henderson, Nevada, opens doors for borrowers with imperfect credit, offering a wide range of flexible home loan solutions.

Their dedicated team carefully considers every application for USDA, FHA, VA, and Conventional loans, welcoming borrowers with unique credit stories. Highlights include:
– FHA loans down to 500 FICO scores
– VA loans with no minimum FICO score
– Flexibility for bankruptcies discharged over 12 months ago, provided there are no new negative marks

According to their website, they offer flexible options for refinancing, cash-out refinancing, and home purchases. For some products, they state: “No FICO score, appraisal, or income documents needed.”

Yet, many customers have voiced concerns about their experiences. The most frequent issues include:
– Issues with payment processing and refusal to accept partial payments.
– Poor customer service and communication.
– Difficulties with modifying loan terms and accessing assistance programs.
– Significant delays in processing loan applications.

If you are thinking about applying for a loan with Village Capital & Investment or want to discover which mortgage options might fit your needs, reach out to Ryon Long. I spoke with Gustan Cho, and he said he had great experience with Ryon Long of Village Capital..

2 Citations

Village Capital & Investment Reviews: 18 User Ratings Village Capital & Investment

https://wallethub.com/profile/village-capital-investment-70208443i

Investors Reviews and Complaints 2026 | Complaints Board

https://www.complaintsboard.com/village-capital-investment-b133841#google_vignette

wallethub.com

Village Capital & Investment Reviews: 18 User Ratings

Village Capital & Investment reviews, contact info, rates & FAQ. Get the full story from fellow consumers' unbiased Village Capital & Investment reviews.

[Tom Miller]

This draft is based on a lease-or-deed approach and the fact that John Doe pays about $2,241 per month toward the mortgage and escrow, even though he is not listed on the deed or mortgage.

1. Home Office Branch Lease and Occupancy AgreementHOME OFFICE BRANCH LEASE AND OCCUPANCY AGREEMENT

This Home Office Branch Lease and Occupancy Agreement (“Agreement”) is made effective ______________________, 2026, by and between:

Homeowner/Landlord:
[WIFE’S FULL LEGAL NAME]
[FULL PROPERTY ADDRESS]
[City], Wisconsin [ZIP]

and

Company:
Coast 2 Coast Mortgage Lending, LLC
NMLS #376205
[COMPANY ADDRESS]

The parties agree as follows:

1. Property

The Homeowner is the record owner of the residential property located at:

[FULL PROPERTY ADDRESS]

John Doe, a Mortgage Loan Originator employed by Coast 2 Coast Mortgage Lending, LLC, resides at the property and uses it as his principal residence.

A copy of the recorded deed identifying the Homeowner as the record owner may be attached as Exhibit A.

2. Designated Home Office

The Homeowner authorizes Coast 2 Coast Mortgage Lending, LLC to use a designated portion of the residence as a home-based mortgage branch office, subject to all applicable licensing, zoning, municipal, insurance, and regulatory requirements.

The designated office contains approximately __________ square feet and consists of:

A private office area within the residence that is suitable and readily accessible for authorized mortgage-related business activities.

The remainder of the property will continue to be used as a private residence.

3. Authorized Business Use

The designated office may be used by Coast 2 Coast Mortgage Lending, LLC and its authorized employee, John Doe, MLO, for lawful mortgage-related activities, including:

• mortgage loan origination;
• branch management;
• telephone, video, and electronic communications;
• administrative work;
• licensing and compliance activities;
• review and maintenance of records when permitted;
• communications with borrowers, lenders, regulators, and other parties involved in mortgage transactions; and
• other lawful activities associated with operating a licensed or registered mortgage branch.

The parties intend for the designated office to be approved as a residential mortgage branch where permitted by the appropriate regulatory authorities.

4. Principal Residence

The parties acknowledge that the property is John Doe’s principal residence.

The property’s residential use will remain its primary use. Business activities will be limited to the designated office area and conducted in a manner consistent with applicable residential-branch and home-occupation requirements.

This Agreement will become effective on ______________________, 2026.

The initial term will be twelve months. After the initial term, the Agreement will continue on a month-to-month basis unless either party provides at least thirty days’ written notice of termination.

Any amendment to this Agreement must be made in writing and signed by the parties.

5. No Separate Monthly Cash Rent

The Homeowner does not require Coast 2 Coast Mortgage Lending, LLC or John Doe to make a separate monthly cash rental payment for use of the designated home office.

The right to use the designated office is granted as part of the parties’ agreement and is supported by their mutual promises, obligations, and responsibilities under this Agreement.

John Doe is responsible for the regular household housing expense associated with the property and currently pays approximately $2,241.00 per month toward the mortgage payment and related escrow charges, including property taxes and homeowners’ insurance.

These housing payments are separate from this Agreement and are not characterized as rent paid to the Homeowner for the branch office.

Coast 2 Coast Mortgage Lending, LLC does not assume responsibility for the residential mortgage, property taxes, homeowners’ insurance, utilities, or other personal household expenses solely because it is authorized to use the designated office.

The Homeowner authorizes Coast 2 Coast Mortgage Lending, LLC to submit this Agreement, the recorded deed, and other reasonably required supporting documents to NMLS, the Kentucky Department of Financial Institutions, and other applicable regulatory agencies in connection with branch licensing, registration, examination, or compliance.

6. Regulatory Access

The Homeowner understands that a licensed or registered residential mortgage branch may be subject to examination or inspection by authorized regulatory agencies.

To the extent required by law or regulation, authorized regulatory personnel may be given reasonable access to the designated business area.

Nothing in this Agreement authorizes access to private residential areas that are not used for mortgage business unless access is otherwise required by law.

7. Compliance With Laws and Local Requirements

Use of the designated home office must comply with all applicable:

• federal laws and regulations;
• state mortgage licensing requirements;
• municipal and county ordinances;
• zoning requirements;
• home-occupation requirements;
• privacy and information-security requirements;
• homeowners’ association or restrictive covenant requirements, if applicable; and
• other laws or regulations governing the operation of a residential mortgage branch.

The property may not be used for unlawful business activities.

8. No Transfer of Ownership

This Agreement does not transfer any ownership interest in the property to John Doe or Coast 2 Coast Mortgage Lending, LLC.

The Homeowner remains the legal owner of the property as shown by the recorded deed.

This Agreement gives Coast 2 Coast Mortgage Lending, LLC and John Doe only the limited right to use and occupy the designated office area for the purposes described in this Agreement.

9. Existing Residential Mortgage

The parties acknowledge that the property is subject to an existing residential mortgage or may otherwise be subject to liens or security interests.

Nothing in this Agreement is intended to:

• transfer ownership of the property;
• transfer responsibility for the residential mortgage;
• constitute an assumption of the mortgage loan;
• modify the terms of the existing mortgage;
• subordinate or impair an existing mortgage or lien;
• create an ownership interest in favor of Coast 2 Coast Mortgage Lending, LLC; or
• interfere with the rights of any existing mortgage holder or lien holder.

John Doe’s payment of the mortgage and escrow expenses does not constitute an assumption of the mortgage by Coast 2 Coast Mortgage Lending, LLC.

10. Insurance, Zoning, and Property Restrictions

Operation of the home office remains subject to applicable:

• homeowners’ insurance requirements;
• zoning laws;
• municipal and county ordinances;
• home-occupation rules;
• subdivision restrictions; and
• restrictive covenants or homeowners’ association requirements, if applicable.

No material structural alteration may be made to the property for business purposes without the Homeowner’s prior written approval.

Any signage associated with the residential branch must comply with applicable licensing, zoning, municipal, homeowners’ association, and other regulatory requirements.

11. Privacy and Information Security

Coast 2 Coast Mortgage Lending, LLC and John Doe will protect borrower and consumer information maintained or accessed from the designated office.

Any physical or electronic mortgage information maintained at the location must be secured against unauthorized access in accordance with applicable federal and state law, regulatory requirements, and company information-security policies.

12. Entire Agreement

This Agreement contains the entire understanding between the parties regarding the use of the designated area of the property as a home-based mortgage branch office.

Any amendment or modification must be in writing and signed by the parties.

13. Governing Law

This Agreement will be governed by the laws of the State of Wisconsin as they apply to the property and the parties’ contractual relationship.

Mortgage licensing and regulatory activities conducted from the property remain subject to the laws, regulations, and requirements of any jurisdiction in which Coast 2 Coast Mortgage Lending, LLC or John Doe is licensed, registered, or authorized to conduct mortgage business.

HOMEOWNER/LANDLORD

[WIFE’S FULL LEGAL NAME]

Signature: ______________________________________

Date: __________________________________________

COAST 2 COAST MORTGAGE LENDING, LLC

NMLS #376205

By: ____________________________________________

Name: _________________________________________

Title: __________________________________________

Date: __________________________________________

ACKNOWLEDGED BY RESIDENT/MLO

John Doe, MLO

NMLS #: ________________________________________

Signature: ______________________________________

Date: __________________________________________

SUGGESTED SUPPORTING EXHIBITS

Exhibit A: Recorded deed identifying the Homeowner as the record owner

Exhibit B: Marriage certificate establishing the relationship between the Homeowner and John Doe

Exhibit C: Documentation establishing the property as John Doe’s principal residence

Exhibit D: Local zoning or home-occupation documentation, if required

Exhibit E: Redacted bank statements or other documentation showing John Doe’s recurring payment of approximately $2,241.00 toward the mortgage and escrow obligations

Exhibit F: Kentucky Form ML-6 and other applicable residential-branch documentation

Bank statements submitted as Exhibit E should be appropriately redacted. Account numbers, unrelated transactions, and unrelated balances should not be included unless specifically requested by the regulator.

2. Kentucky Department of Financial Institutions Cover Letter

[DATE]

Kentucky Department of Financial Institutions
Division of Non-Depository Institutions
500 Mero Street
Frankfort, Kentucky 40601

RE: Residential Branch Registration

Coast 2 Coast Mortgage Lending, LLC – NMLS #376205
Mortgage Loan Originator/Resident: John Doe, MLO
Proposed Residential Branch: [FULL WISCONSIN PROPERTY ADDRESS]

Dear Licensing Examiner:

Coast 2 Coast Mortgage Lending, LLC respectfully submits the enclosed documentation in support of its application to register the above Wisconsin residence as a residential mortgage branch.

John Doe, MLO, resides at the property as his principal residence and is employed by Coast 2 Coast Mortgage Lending, LLC.

The property is owned solely by [WIFE’S FULL LEGAL NAME], John Doe’s spouse. John Doe is not a record owner of the property and is not a borrower on the residential mortgage.

The record owner has executed the enclosed Home Office Branch Lease and Occupancy Agreement, expressly authorizing Coast 2 Coast Mortgage Lending, LLC and John Doe to use a designated portion of the residence for lawful mortgage-related business.

Lease and Deed Documentation

Section 5 of 808 KAR 1:170 requires submission of a copy of the lease or deed for a branch location.

Because the property is titled solely in the Homeowner’s name, the Company is submitting both:

1. The executed Home Office Branch Lease and Occupancy Agreement, which establishes Coast 2 Coast Mortgage Lending, LLC’s contractual right to use the designated office; and
2. The recorded deed, which establishes that the individual granting those occupancy rights is the property’s record owner.

Together, these documents establish the Company’s right to occupy and use the designated portion of the residence as the proposed branch location.

John Doe’s Principal Residence

The proposed branch location is John Doe’s principal residence.

Although John Doe is not named on the recorded deed or residential mortgage, he resides at the property full-time.

The Company can provide documentation establishing its residency, including government-issued identification, utility records, financial documents, or other reasonable evidence requested by the Department.

The Homeowner has specifically authorized both Coast 2 Coast Mortgage Lending, LLC and John Doe to use the designated office area for mortgage-related business, subject to applicable licensing and regulatory requirements.

The Agreement grants only the right to occupy and use the designated business area. It does not transfer any ownership interest in the property.

Housing Expense Payments

John Doe contributes directly to the financial obligations associated with his principal residence.

He currently pays approximately $2,241.00 per month toward the mortgage payment and related escrow expenses, including property taxes and homeowners’ insurance.

If the Department finds this information helpful in establishing John Doe’s continuing occupancy and financial responsibility for the residence, he can provide appropriately redacted bank statements or other supporting documentation showing these recurring payments.

These housing-expense payments are separate from the Home Office Branch Lease and Occupancy Agreement and are not being represented as rent paid to the Homeowner.

No Separate Monthly Cash Rent

The Homeowner does not require Coast 2 Coast Mortgage Lending, LLC or John Doe to make an additional monthly cash rental payment for the designated office area.

Instead, the Homeowner has granted the Company, by contract, the right to use the designated portion of the property under the terms and obligations set forth in the enclosed Agreement.

The Company understands that Section 5 of 808 KAR 1:170 requires documentation of a lease or deed for the branch location. The provision cited above does not state a minimum monthly rental amount.

If the Department imposes an additional requirement regarding monetary rent or other consideration for a residential branch agreement, the Company respectfully requests clarification and will promptly address any such requirement.

Documents Included With the Submission

The Company is providing, or is prepared to provide, the following documents in connection with the residential branch application:

1. Home Office Branch Lease and Occupancy Agreement;
2. recorded deed identifying the Homeowner;
3. marriage certificate;
4. documentation establishing the property as John Doe’s principal residence;
5. Kentucky Form ML-6, Disclosure of Location at a Residence;
6. Kentucky Form ML-7, Branch Authorization Form, if applicable;
7. local zoning or home-occupation documentation, if required;
8. applicable NMLS branch filing documentation; and
9. if requested, redacted documentation showing John Doe’s recurring payment of approximately $2,241.00 toward the mortgage and escrow expenses.

Any financial documentation submitted for this purpose can be limited to information relevant to the housing payment and appropriately redacted to protect account numbers, unrelated transactions, and other personal financial information.

Request for Approval

Coast 2 Coast Mortgage Lending, LLC respectfully requests that the Department accept the enclosed Home Office Branch Lease and Occupancy Agreement, together with the recorded deed and supporting documentation, as evidence of the Company’s lawful right to occupy and use the proposed residential branch location.

If the Department believes that John Doe must personally hold record title to the property despite the record owner having executed a written lease and occupancy agreement in favor of the licensed mortgage company, we respectfully request identification of the applicable Kentucky statute, administrative regulation, NMLS requirement, or Department policy establishing that requirement.

We likewise request clarification if the Department requires a specific minimum rental amount or other monetary consideration in a residential branch lease.

The Company is prepared to provide any additional documentation reasonably required to complete the Department’s review.

Thank you for your consideration of this submission.

Respectfully,

Authorized Representative
Coast 2 Coast Mortgage Lending, LLC
NMLS #376205

Name: _________________________________________

Title: __________________________________________

Telephone: _____________________________________

Email: __________________________________________

I also made sure it’s clear that John Doe’s $2,241 housing payment is separate from the $0 office rent. The original suggests labeling the bank records as additional evidence of principal residence and housing obligations, rather than as “proof of rent,” which is a helpful distinction for this package.

• This reply was modified 1 week, 4 days ago by  Sapna Sharma.

[Tom Miller]

The most recent FHA rules specify that any payment made even a few days late is not considered on time during an active Chapter 13 plan.

FHA standards raise the bar, requiring more than the typical 30-day late-payment rule most mortgages follow.

HUD Handbook 4000.1 states that a borrower in an active Chapter 13 bankruptcy may qualify after making at least 12 months of payments, provided the lender verifies this payment history for the preceding year:

The borrower has made all required payments on time and met their obligations.

The borrower also needs permission from the bankruptcy court to get a mortgage.

HUD does not accept a Chapter 13 payment just because it was made within 30 days of the due date.

Your facts are:

• Payment due: April 8, 2026
• Payment made: May 1, 2026
• Difference: 23 days
• The borrower has made approximately 15 payments under the plan.
• The delay stemmed from serious family health crises and the loss of a loved one.
• The payment was made current before reaching the 30-day mark.

Although the payment was not 30 days late, FHA’s Chapter 13 rule does not use the 30-day delinquency standard. Instead, it checks whether all required payments to the Chapter 13 trustee were made on time.

Recognizing this distinction is essential for an accurate FHA compliance assessment. Bankruptcy law usually requires the debtor to start plan payments within 30 days of filing the plan or order for relief. However, this rule does not grant a 30-day grace period for each monthly Chapter 13 payment.

The U.S. Courts say that a confirmed Chapter 13 plan requires regular payments to the trustee, and the debtor must keep making those payments as the plan says. If payments aren’t made, the case could be dismissed or changed.

The most important documents are the confirmed Chapter 13 plan, the confirmation order, the local bankruptcy rules, and the trustee’s handling of payments.

I would not immediately conclude that this borrower has a disqualifying late payment under FHA rules. The underwriter should confirm whether the April payment was actually considered late.

The underwriter should determine whether the April payment was late under the specific terms of the Chapter 13 plan, rather than relying only on payment dates or general standards. If the payment was late or in default, note that the issue was resolved 23 days later, upon receipt on May 1. If the trustee’s records and the confirmed plan show the debtor remained current, was never in default, and the trustee is satisfied with the payment history, this should be thoroughly documented.

Every case can bring its own unique twists and turns.

This highlights just how pivotal the trustee’s role becomes in situations like these.

I recommend that the bankruptcy adviser contact the Chapter 13 trustee and request a signed letter or certificate that addresses this specific situation, rather than providing only a general payment record. The trustee’s letter should address the following points:

The debtor has been actively participating in a Chapter 13 repayment plan for about 15 months.

1. The monthly trustee payment due in April 2026 was received on May 1, 2026.
2. The trustee should determine whether the payment in question was late or overdue under the confirmed plan.
3. Whether the debtor was at any time regarded as being in default of the confirmed Chapter 13 plan as a result of this payment.
4. It should be verified whether a notice of late payment, a notice of default, a motion to dismiss, or any other enforcement action was issued regarding the April payment.
5. Whether the debtor is still in good standing and is up-to-date with the Chapter 13 plan.
6. The trustee should also assess if the debtor’s overall payment record is satisfactory.

Any necessary adjustments should follow the plan’s requirements. If accurate, the trustee may state: The Trustee does not consider the debtor in default under the confirmed Chapter 13 Plan because of the payment made on May 1, 2026, and the debtor’s repayment plan is current and in good standing. This statement should only be given if truthful. Bankruptcy courts and trustees may apply different standards for late payments. Some local rules distinguish between a late payment and a default, which may lead to a notice or motion to dismiss. In some jurisdictions, there is a set period to resolve a late payment before dismissal proceedings start, unlike the 30-day grace period under FHA rules. Therefore, the underwriter should review the actual plan and trustee records rather than assume that all late payments are treated the same in every Chapter 13 plan. While a family emergency or death may explain the late payment, it does not fully resolve the core issue. All medical emergencies and losses should be thoroughly documented. However, ‘extenuating circumstances’ should not be the main basis for FHA approval. The Handbook allows exceptions for extenuating circumstances in other areas, such as Chapter 7, foreclosure, and short sales, but HUD does not clearly allow this under the current Chapter 13 rule. Instead, it states that a late payment on a Chapter 13 plan in the past 12 months might be overlooked due to extenuating circumstances. This distinction is clear in the FHA rules.

A stronger case is made if the records show the May 1 payment was not considered late or in default under the Chapter 13 plan, as confirmed by both the plan and the trustee.

This strategy builds a far stronger case than simply explaining why the payment was late.

If the trustee actually says the April payment was late

At that stage, the process becomes more challenging. The FHA underwriter would have substantial grounds to deny the loan if the trustee’s official records indicate that the payment due on April 8 was required by that date and contained no provision for a later payment.

The Handbook specifies that “all the payments which were required have been made on time” during the last 12 months; it does not state that no payments were 30 days late. The most prudent FHA approach is to ensure all trustee payments remain on time until the April/May 2026 event falls outside the most recent 12 months of payment history. Nevertheless, I would wait to proceed until I receive clear confirmation of the trustee’s position from the bankruptcy advisers.

The attorney representing the borrower should review the confirmation order and the Chapter 13 plan.

As long as the bankruptcy court rules allow it, the lawyers could decide whether the court could issue an order confirming that the debtor remained in compliance or up to date under the plan, or whether some other formal clarification or change would be possible.

The trustee cannot change the payment history just to facilitate FHA loan approval. However, both the trustee and bankruptcy court can clarify the confirmed plan’s requirements and whether the debtor was actually in default. This distinction can greatly affect the FHA underwriting outcome. I would not accept a denial based solely on the payment being made on May 1 rather than April 8 without further review. I would assemble an underwriting package that includes:

Confirmed Chapter 13 plan

• Confirmation order
• Complete trustee payment history
• Evidence showing the April 8 payment was made on May 1
• A letter from the trustee specifying whether this situation constituted a delinquency or a default.
• Evidence that there was no motion to dismiss or default action, if applicable
• Borrower’s concise LOE explaining the family medical/death emergency
• Include any necessary documents if they are available.
• Evidence of every payment before and after this event
• Bankruptcy court permission to incur the new FHA mortgage debt

I recommend that the bankruptcy adviser contact the Chapter 13 trustee and request a signed letter or certificate addressing this specific situation, rather than only providing a general payment record. The trustee’s letter should address the following points:

Submitting the April 8 payment to the trustee on May 1 does not ensure FHA acceptance, even if the payment was less than 30 days late. FHA has never established a 30-day grace period for active Chapter 13 trustee payments. I would not classify it as a disqualifying late payment until I reviewed the confirmed plan and obtained a written statement from the trustee.

The most effective way to advance this FHA loan is for the Chapter 13 trustee to provide a clear letter. This letter should explain the status of the April payment, confirm that no default or dismissal action was taken, state that the borrower is in good standing, and demonstrate that repayments have been satisfactory.

If desired, I can draft the specific letter for the bankruptcy attorney or trustee to sign. This letter would address HUD Handbook 4000.1 and provide the FHA underwriter with the strongest possible rationale to reconsider the file.

• This reply was modified 1 week, 5 days ago by  Sapna Sharma.

[Tom Miller]

Yes, if you have an FHA loan, the underwriter might consider your April payment late, even if it was just a few days after the trustee’s deadline.

A late payment is not the same as a 30-day delinquency on your credit report. These are two different things.

FHA rules for active Chapter 13 cases are strict. HUD says lenders must check that all payments made in the past 12 months were on time, as stated in FHA Handbook 4000.1, last updated on August 12, 2026.

Here are the dates you provided:

Trustee payment due: April 8, 2026

Payment made/received: May 1, 2026

Days after due date: 23 days

If your payment was due on April 8 and you did not get an extension, it is considered late. FHA guidelines do not allow a 30-day window. Any payment not received by the due date is late, even if it is only one day late.

Why is the ’30-day rule’ frequently mentioned?

The ’30 days’ usually refers to credit reporting, where debts are marked as 30, 60, or 90 days late. This does not mean every creditor gives you a 30-day grace Chapter 13 has its own payment rules. Federal bankruptcy law says you must start making payments within 30 days of filing your plan or getting a court order. This sets your first payment date, but it does not allow late payments or a 30-day grace period. Once your plan is approved, you have to follow a set payment schedule. Missing payments can lead to your case being dismissed or changed. Trustees usually do not allow extra time. For example, a trustee in the Middle District of Florida says in an FAQ that payments must start within 30 days and are due on the same day each month. When asked about extensions, the answer is ‘No.’ Rules can vary by area, so check your confirmation order, plan, and trustee rules for details. Requirements.

The most important thing is following FHA rules, not whether the payment is called ’30-day late.’

At this point, it may be hard to get the underwriter to change their mind.

HUD doesn’t say:

A payment for Chapter 13 can’t be more than 30 days late.

Instead, FHA rules say lenders must check that all payments were made on time and that you stayed in good standing over the past 12 months.

The exact wording in the guidelines can make a big difference in your case.

A payment thA payment that is 23 days late might not show up as a 30-day-late payment on your credit report, but it still does not meet the requirement if the trustee expected it by April 8. do not recommend abandoning your case at this point.

Before you accept the underwriter’s decision, get the official Chapter 13 trustee payment history, the approved plan or order, and the trustee’s payment rules. The main question is whether April 8 was a strict deadline or just the scheduled payment date, not just what the ledger shows for ‘April 8’ and ‘May 1.’ For example, you may have made the payment before April 8, but the trustee did not record it until May 1.

* If your payment was made through payroll deduction, the delay might have been caused by your employer or the payroll processor, not by you.

* Sometimes, the trustee or court may have given you extra time to pay or changed your payment plan.

* The approved plan might have a different payment deadline than what is shown in the payment history.

* The trustee might be able to provide you with a letter confirming that you did not miss any payments or fall behind on your Chapter 13 plan for April 2026.

* The ‘May 1’ date on the ledger shows when the payment was recorded, not when you actually made it.

This detail could be very important. For active FHA Chapter 13 cases, do not say there is a 30-day grace period. There isn’t enough evidence for this, and making that claim could hurt your case.

Chapter 13 plan?

You can ask your bankruptcy attorney or trustee a question like this:

Can you please tell me whether the payment for Chapter 13 that was due on April 8, 2026, but wasn’t received and posted until May 1, 2026, is considered late or delinquent under the confirmed plan? Also, was the debtor still up to date and in good standing with the plan? If the trustee says, ‘the debtor remained current, and this was not considered a delinquent plan payment,’ you will have strong evidence to show the DE underwriter. On the other hand, if the trustee says the April payment was late, the FHA underwriter probably has a strong case. The main issue is not whether the payment was 30 days late, but whether the FHA’s Chapter 13 rule was met, which requires all payments in the past 12 months to be on time.

To help you more, please tell me your state or bankruptcy district and your loan type (FHA, VA, USDA, or conventional). With this information, I can review the trustee’s rules and your mortgage guidelines to determine whether you have grounds to challenge the condition. This will help me give you the best advice for your next steps.

[Tom Miller]

Thinking about buying a house sold as-is with a bad deck? Find out when you can use conventional financing and when you might need to fix the deck before closing.

Can You Get a Conventional Loan on a House Sold As-Is With a Bad Deck?A bad deck can impact your ability to get a conventional loan, but selling a house as-is is not always a dealbreaker.

You might be able to get a conventional loan on a house sold as-is with a bad deck, but the deck’s condition is still important.

The main issue isn’t whether the contract says the house is being sold “as-is.”

The real question is this:

Is the deck in a condition that affects the safety, stability, or strength of the property?

If the deck just looks old, needs some surface fixes, or has normal wear, the appraisal might still be done without changes.

But if the deck is in very poor condition, is unsafe, or might collapse, the appraiser may require repairs or replacement before the loan can be finalized.

If the seller refuses to make repairs, it doesn’t always end the deal, but it can cause financing issues if the appraisal requires repairs.

An As-Is Real Estate Contract Does Not Override Conventional Mortgage Property Requirements

This is a key point for homebuyers to know.

When a seller says:

“The house is being sold as-is, and I am not making any repairs.”

That’s mainly a negotiation between the buyer and seller.

It doesn’t mean the lender, appraiser, Fannie Mae, or Freddie Mac has to accept all property conditions.

The lender still needs to decide whether the house is sufficient collateral for the loan.

Put simply:

“As-is” does not mean “the lender has to finance it exactly as it is.”

If the appraiser finds a problem that affects safety, stability, or strength, the appraisal may need to be finished only after the problem is fixed. Fannie Mae requires appraisals to be conditional when such issues are found.is a bad deck still okay for a conventional loan?

Not every deck that needs repairs has to be replaced before closing.

There is a big difference between normal wear and tear and a serious safety or structural problem.

Small Deck Issues May Not Block Conventional Financing

Examples might include:

• Faded or peeling stain
• Surface damage
• Minor surface cracking. Worn boards that are still strong and und
• An older deck that is functional but nearing the end of its useful life
• Minor deferred maintenance that does not create a safety hazard

An appraiser might notice these issues, adjust the property’s value, and still finish the appraisal as-is.

Fannie Mae guidelines state that minor problems that don’t affect safety, stability, or structure can usually be noted in the appraisal rather than fixed before closing.

A Severely Damaged or Unsafe Deck Is a Different Situation

The situation is different when the deck is seriously damaged.

Examples that could create concerns include:

• Rotten support beams, Weak or failing support posts
• Noticeable shaking when walking on the deck
• Falling apart or badly damaged stairs

Loose support connections, where the deck attaches to the house

• Big sections of broken or missing deck boards
• Problems that clearly risk someone falling
• Damage that could make the deck fall down

There isn’t a rule that says a bad deck always has to be replaced for a conventional mortgage.

Instead, the appraiser assesses the deck’s actual condition.

If there is a safety, stability, or structural problem, the appraisal might require repairs, replacement, or another check.

It’s the Appraiser, Not the Seller, Who Decides How the Deck Is Reported

The seller can state that the deck is being sold as is.

But that does not decide what the appraiser will say.

The appraiser must report the property’s condition on their own.

Usually, there are three possible outcomes.

The Appraiser Determines the Deck Is Acceptable As-Is

This is the ideal situation.

The appraiser may notice delayed maintenance but decide it does not affect safety, stability, or structure.

The appraiser would then include the deck’s condition when figuring the property’s value.

The conventional loan may move forward without fixing the deck.

The Appraiser Requires the Deck to Be Repaired or Replaced

This makes the process more difficult.

The appraisal might be written:

“Subject to completion of repairs. The lender usually cannot ignore that problem.

After repairs are done, the lender may need proof the work is finished before approving the loan.

The Appraiser Requires an Inspection by a Qualified Professional

Sometimes, an appraiser can see a problem but is not qualified to judge how serious the structural issue is.

For example, the appraiser may see damage in the deck supports but cannot tell if the deck is still strong. Mae permits the appraisal to be made subject to an inspection by a qualified professional when the appraiser cannot adequately evaluate the condition. The lender then reviews the inspection and determines whether additional action is necessary.

Fannie Mae and Freddie Mac do not treat every property in poor condition the same way.

This is an important difference in conventional mortgages that buyers and real estate agents often overlook.

Fannie Mae May Permit Some C5 Properties to Close As-Is

Appraisers use property condition ratings ranging from C1 through C6.

A C5 property A C5 property usually has clear delayed maintenance and needs big repairs, but it can still be used and works. permits C1 through C5 properties to be eligible in as-is condition, but physical deficiencies that affect safety, soundness, or structural integrity must still be addressed.

This difference matters when a property has major delayed maintenance but no real safety or structural issues.

Freddie Mac has stricter rules for C5 and C6 properties

Freddie Mac’s current guidance is different.

A property with problems matching an as-is C5 or C6 rating is not acceptable for a standard Freddie Mac mortgage unless those problems are fixed before the loan is finalized.

So, the specific type of conventional loan can make a difference.

However, if the deck has a real safety, stability, or structural problem, switching between Fannie Mae and Freddie Mac should not be seen as a way to avoid fixing it.

The deck’s condition still needs to be checked closely.at Happens If the Appraisal Requires the Deck to Be Replaced?

This is when it really matters if the seller won’t make repairs.

Suppose the appraisal says something similar to:

“Appraisal is subject to replacement or repair of the deteriorated rear deck.”

The loan usually cannot close if the problem is not fixed.

Someone has to decide how the repair will be done. Seller Could Agree to Make the Repair

This is the easiest fix, but it doesn’t help if the seller refuses to do any repairs.

The buyer and seller could potentially renegotiate the purchase agreement, but the seller is not automatically required to agree.

The Buyer May Be Able to Pay for the Repair Before Closing

This sometimes happens, but buyers must be very careful.

The buyer doesn’t own the property yet.

Don’t spend thousands fixing someone else’s property unless you have the proper written agreements and approval from all parties.

You also need to consider insurance, liability, permits, access, contracts, and financing.

The loan officer, real estate agents, closing lawyer (if needed), and lender should all be involved before a buyer does or pays for any work before owning the property.

A Seller Credit Does Not Automatically Solve a Required Repair

This is another thing people often get wrong.

Suppose replacing the deck will cost $12,000.

The seller might say:

“I will give the buyer a $12,000 closing-cost credit instead.”

That might help with closing costs, depending on rules for seller contributions and other requirements. But a credit does not automatically satisfy an appraisal rule requiring the deck to be fixed before closing.

Giving money and actually doing the repair are two different things.

If the appraisal says the problem must be fixed, just giving the buyer money does not fix the unsafe condition.

Lender Escrow, the Deck Repair Until After Closing?

Fannie Mae allows lenders, if they choose and follow the rules, to hold money for certain small repairs that do not affect the property’s safety, stability, or structure.

Fannie Mae permits lenders, at their discretion and subject to applicable requirements, to escrow certain minor items that do not affect the property’s safety, soundness, or structural integrity.

But don’t assume you can just hold money for a badly damaged deck that needs full replacement until after closing.f the deck is a real safety or structural problem, it probably needs to be fixed before you can get a standard conventional loan.

Check with your lender before planning to hold money for repairs.

A Renovation Conventional Loan May Be an Option When the Seller Refuses Repairs

If the deck really needs to be replaced and the seller won’t do it, you might want to consider renovation financing. Fannie Mae HomeStyle Renovation could cover the cost of the deck replacement.

Fannie Mae’s HomeStyle Renovation mortgage allows eligible borrowers to purchase a property and include qualifying renovation costs within the financing.

The program is specifically designed for situations where repairs or improvements are part of the transaction.

With this loan, you don’t have to finish all repairs before buying. The loan is based on the home’s value after the renovations and an approved plan. Not all lenders offer HomeStyle Renovation loans, and these loans require extra paperwork and management.

Freddie Mac CHOICERenovation May Also Be Available

Freddie Mac offers a similar renovation mortgage called CHOICERenovation.

Freddie Mac specifically states that properties with C5 or C6 conditions may be eligible under CHOICERenovation when the conditions causing those ratings are cured through the renovation.

This can be a good choice if a conventional loan won’t work because of the property’s condition.

Do Not Assume an Appraisal Waiver Will Solve the Deck Problem

Sometimes borrowers hear:

“Maybe we can get an appraisal waiver and nobody will care about the deck.”

I wouldn’t recommend that approach. Even when the lender knows about a bad physical condition of the property, they may still need additional property checks.

Fannie Mae states that when a sales contract identifies repairs that are not minor, or that may affect safety, soundness, or structural integrity, a lender may need an appraisal rather than relying on value acceptance.

Freddie Mac similarly states that a seller may not accept an ACE appraisal-waiver offer when it is aware of an adverse physical property deficiency warranting an appraisal or property data report.

You should never use an appraisal waiver to hide or avoid a known problem with the property.

What I Would Do Before Moving Forward With This Conventional Loan

Since you already know the deck is in poor condition and needs to be replaced, it’s better to address the financing now rather than waiting until the end of the mortgage process. First, find out exactly how bad the deck is. There is a big difference between:

“This deck looks terrible and should eventually be replaced.”

and:

“This deck is structurally unsafe and cannot safely be used.”

Take clear photos and, if needed, get a quote or evaluation from a qualified deck contractor or other professional. Then talk to your loan officer about whether the loan is being approved for Fannie Mae or Freddie Mac. Whether the lender thinks the known condition might need more property review

• Whether a regular conventional loan is still possible
• Whether holding money for repairs is possible if the problem is really small
• Whether renovation financing should be an option
• What other options exist if the appraisal requires deck replacement

It’s much better to discuss these options early than to find out you need a $10,000, $15,000, or $20,000 repair right before closing. Bottom line: You can get conventional financing for a house sold as-is, but an unsafe deck can stop the closing.

The fact that the sellThe fact that the seller is selling the house as-is does not, by itself, prevent conventional financing.e to look perfect or be brand new, either.

What really matters is the deck’s actual condition.

If the deck is just old or has some wear but isn’t a safety or structural problem, you might still be able to close the loan as-is, depending on the appraisal, lender, and agency rules.

But if the deck is unsafe or structurally damaged, the appraiser may require repairs, replacement, or another expert inspection. If the case and the seller won’t make repairs, you may need to consider other options, such as approved pre-closing repairs, renegotiating the deal, or using a renovation loan like Fannie Mae HomeStyle Renovation or Freddie Mac CHOICERenovation.

The first thing I’d want to know is exactly what’s wrong with the deck. Is it just worn out, or is it really unsafe or structurally damaged? That difference can completely change your loan options.

Frequently Asked Questions About Conventional Loans and Houses With Bad Decks

Can You Buy a House As-Is With a Conventional Loan?

Yes. Conventional loans can finance houses being sold as-is. The property does not have to be in perfect condition. However, known conditions that affect safety, soundness, structural integrity, property eligibility, or marketability may require additional review or repair.

Will a Conventional Appraiser Require a Bad Deck to Be Replaced?

Not automatically. The appraiser must evaluate the condition. An older or cosmetically damaged deck may potentially be acceptable as-is. A deck that is structurally unstable or poses a significant safety concern is much more likely to require repair, replacement, or inspection.

Can a Conventional Loan Close With a C5 Property Condition Rating?

It depends on the conventional agency and the specific condition. Fannie Mae can permit certain C5 properties as-is when the deficiencies do not affect safety, soundness, or structural integrity. Freddie Mac generally requires conditions consistent with an as-is C5 or C6 rating to be cured before a standard mortgage is delivered.

Does an As-Is Contract Mean the Appraiser Cannot Require Repairs?

No. The as-is language is part of the purchase agreement between the buyer and seller. It does not prevent the appraiser from reporting a condition or the lender from requiring the property to satisfy conventional eligibility requirements.

Can the Seller Give the Buyer Money Instead of Replacing the Deck?

A seller may be able to provide an allowable seller credit subject to conventional financing rules, but a credit does not automatically satisfy a required property repair. If the appraisal requires the deck to be repaired before closing, the physical work must generally be addressed in accordance with the lender’s requirements.

Can the Buyer Replace the Deck After Closing?

Potentially, if the deck condition is eligible to remain as-is, and the lender does not require replacement before closing. If the appraisal or lender makes replacement a condition of the mortgage, the buyer cannot simply promise to complete it later unless an approved financing or escrow structure specifically permits that arrangement.

Can a Buyer Repair the Deck Before Owning the House?

It may sometimes be possible, but it should never be done casually. The buyer does not yet own the property. Any pre-closing work should be coordinated with the seller, lender, real estate professionals, insurance parties, and, where appropriate, the attorney, with the necessary written permissions and agreements.

Can a Repair Escrow Be Used for a Bad Deck?

Possibly for minor qualifying repairs, depending on the lender and loan structure. A repair escrow should not be assumed available for a serious safety or structural defect. Fannie Mae’s standard guidance allows lender-discretionary escrows for certain minor conditions that do not affect safety, soundness, or structural integrity.

What If the Appraiser Cannot Determine Whether the Deck Is Structurally Safe?

The appraisal may be made subject to evaluation by an appropriately qualified professional. The lender can then review that professional’s findings to determine whether repairs are required.

Can We Switch Conventional Lenders If One Lender Requires the Deck to Be Repaired?

Changing lenders does not eliminate Fannie Mae or Freddie Mac property requirements or make a genuine safety or structural defect disappear. However, lenders may apply different overlays, and Fannie Mae and Freddie Mac differ in how they handle property condition ratings. The complete appraisal and loan structure should therefore be reviewed before assuming the transaction cannot be financed.

Can HomeStyle Renovation Finance a New Deck?

Potentially, yes. Fannie Mae HomeStyle Renovation permits borrowers to purchase a property while financing eligible repairs and renovations as part of the transaction, subject to the program’s appraisal, contractor, borrower, and lender requirements.

One point I would keep exactly as written is the Fannie Mae versus Freddie Mac C5 explanation. That distinction makes this response substantially stronger than the typical generic answer that simply says “conventional loans allow cosmetic repairs.” The current Freddie Mac Guide is explicitly stricter with as-is C5/C6 deficiencies.

• This reply was modified 2 weeks, 5 days ago by  Sapna Sharma.

[Tom Miller]

Hi Tina,

Thank you for providing the requested information. With a middle mortgage score of about 602 and only a few late payments, you remain eligible for FHA loan consideration.

Your FHA loan application will be thoroughly reviewed and will not be declined solely due to your credit score.

A Mortgage Score of 602 Does Not Automatically Disqualify You from FHA Loan Eligibility

• Your middle mortgage score of 602 exceeds the FHA minimum requirement of 580 for full financing.
• FHA does not require a score of 620, 640, or 660 to qualify.
• While approval is not guaranteed, we will evaluate your payment history, debt-to-income ratio, assets, housing background, and details of your Credit Acceptance account.
• Our team regularly assists FHA borrowers with lower credit scores or complex credit histories who need manual review.

The First Step is to Submit Your File Through the FHA’s Automated Loan Approval System

We will ensure your application is complete and submit it through the FHA-approved automated system, FHA TOTAL Mortgage. This system typically returns either an Accept or Refer result. An Accept allows the loan to proceed automatically. A Refer requires manual review. FHA guidelines state that a loan should not be approved or denied solely based on the TOTAL result.

Different FHA lenders may reach different decisions than your previous lender. If you receive a Refer, manual underwriting remains an option. Our team has extensive experience with FHA files requiring manual underwriting.

Manual review involves a detailed examination of your recent payment history. FHA guidelines allow a reviewer to accept your credit history if your housing and loan payments have been on time for the past 12 months and if there have been no more than two payments 30 days late in the last 24 months. FHA also applies specific rules for significant credit card issues. If standard credit criteria are not met, the reviewer will consider whether late payments resulted from debt management challenges, neglect of financial obligations, or other documented circumstances.

How Mortgage Underwriters Look at Auto Loan Under Borrower’s Name But Divorce Decree Grants Auto to Ex-Husband

We will review your Credit Acceptance and Capital One payment histories, focusing on the timing and reasons for any 30-, 60-, or 90-day late payments. The divorce decree is important because it assigned the vehicle debt to your ex-spouse. FHA has specific rules for debts related to divorce decrees and court orders.

When a debt is assigned by a divorce decree or court order, FHA does not require the lender to verify 12 months of on-time payments by the other responsible party, as it does for other debts.

The lender must obtain the divorce decree or court order assigning payment responsibility. I recommend focusing on several key elements: the divorce decree or court order, the section assigning responsibility for the Credit Acceptance debt, the account history, documentation of payment responsibility, and any records showing your ex-spouse was responsible for the vehicle. Depending on the account structure, it may be possible to exclude the monthly Credit Acceptance payment from your debt-to-income ratio for FHA purposes.

The Divorce Decree Does Not Automatically Erase the Late Payments

This may be the most significant factor in your application. Even if the Credit Acceptance payment is excluded from your debt-to-income ratio, the late payment history will still be evaluated. The account remains on your credit report and reflects late payments, which the reviewer must consider as part of your credit history. Therefore, it is essential to gather all necessary documentation.

Payment History of Auto Loan Prior to and After Divorce

We will need to clarify who possessed the vehicle, who was responsible for payments, the date the divorce decree was entered, whether your ex-spouse complied with the court order, and whether any late payments occurred before or after your ex-spouse assumed responsibility for the account. These factors can significantly influence the reviewer’s decision. Your $40,000 in cash or readily available funds is a substantial asset. Money market funds further strengthen your application. Documented cash reserves provide a considerable advantage.

FHA typically requires at least three months of mortgage payments in reserves for a one- or two-unit property, or six months for a three- or four-unit property, when reserves are used to qualify.

The required reserve amount depends on eligible assets remaining after closing. With over $40,000 in verified funds, you have a significant advantage, subject to your purchase price, mortgage payment, required cash to close, and remaining assets. If your score is 580 or higher, FHA’s manual review guidelines may allow higher debt limits with proper documentation.

What Kind of Income Can I Use as Qualified Income

Supplemental Security Income (SSI) may be considered qualifying income if it meets FHA’s documentation and continuation requirements. Acceptable documentation includes an SSA award letter, bank statements showing deposits, tax documents, or other approved evidence, depending on the benefit type. If the award documentation does not specify an expiration date, FHA generally assumes the income will continue and does not require proof of the medical condition. For court-ordered support, FHA typically requires a divorce decree, separation agreement, court order, or similar document, along with proof of payment. The income must be expected to continue for the required duration.

Recent payments can be shown through bank deposits, canceled checks, or records from the child-support agency. We would review your child’s ages, the court order, payment history, and the anticipated duration of support.

I would not decline your file based solely on the information provided. While certain issues require attention, particularly the late payments with Credit Acceptance and Capital One, your file demonstrates several strengths: stable employment and qualifying income, a 602 middle mortgage score, over $40,000 in verified funds, potentially qualifying SSI and child support income, and a court order assigning the Credit Acceptance debt to your ex-spouse.

Mortgage Underwriters Will Review Your Complete Credit Report

The next step is to review your complete credit report and supporting documents and determine the outcome from the FHA TOTAL system before making any decisions. If the system provides an Accept, we will proceed using the automatic approval guidelines.

If the system provides a Refer, we will assess whether your payment history meets FHA manual review criteria and whether the divorce and other supporting documents justify approval. The most recent FHA requirements are outlined in HUD Handbook 4000.1, updated by HUD on August 12, 2026.

If you would like us to review your file, please provide your most recent tri-merge mortgage credit report, divorce decree or court order, Credit Acceptance and Capital One payment histories, recent pay stubs and W-2s, SSI award or benefit documentation, child support order and proof of payments, and your latest savings and money market account statement. Our goal is not to overlook negative credit but to determine whether your circumstances can be thoroughly documented and if your complete file meets FHA requirements. Based on the information you have provided, I believe your file merits a comprehensive review before you decide whether to continue pursuing FHA financing.

Most Recent Updated HUD Guidelines on FHA Loans

The current HUD Handbook page confirms that the August 12, 2026 update is the most recent published version of Handbook 4000.1. Accordingly, I have based this response on the current FHA framework rather than previous lender guidelines. I have emphasized the divorce decree issue because it is likely the most significant underwriting factor in your case. The decree may allow exclusion of the payment, but it does not automatically remove the negative credit history.

[Tom Miller]

You can request a letter from the Chapter 13 Trustee or their staff, who usually provide it upon request. Underwriters will review how the Trustee handled the May 1 payment. HUD Handbook 4000.1 for Chapter 13 requires payments to be made on time and as agreed. The latest version of this Handbook was released on August 12, 2026.

When you ask the Trustee for a letter, be sure to clearly state what information FHA underwriters need. This should cover whether the debtor was ever late or in default, any actions the Trustee took, and if the plan has stayed in good standing. The Trustee does not have to give opinions or interpret FHA rules.

[Chapter 13 Trustee Letterhead]

[Date]

Chapter 13 Bankruptcy Payment History and Plan Status

[Full Name of Borrower/Debtor]

Case No. [Bankruptcy Case No.]

[Court Name]

To whom it may concern:

This letter gives details about the payment history for [Full Name of Borrower/Debtor] in Chapter 13 case number [Case No.], filed in [Court Name].

[Name of Borrower/Debtor] filed for Chapter 13 bankruptcy on [Filing Date of Chapter 13 Petition], and the reorganization plan was approved on [Plan Confirmation Date].

After the plan was confirmed, [Name of Borrower/Debtor] made [Number] payments to the Chapter 13 Trustee.

The monthly Chapter 13 payment due on April 8, 2026, was paid to the Trustee on May 1, 2026, making it 23 days late.

Should you have If you have any questions about this Chapter 13 case, please contact [Name of Chapter 13 Trustee].s made within 30 days of its due date. The amount paid was correct. Since the payment was received on time, the Trustee regarded the debtor as not in default under the Chapter 13 plan and took no action, such as filing a Motion to Dismiss, a Motion to Convert, or sending a default notice.

A. The debtor was in good standing with regard to the Chapter 13 plan on or about May 1, 2026, as a result of the payment made on or about that date.

B. The payments have been made in line with the Chapter 13 plan.

C. The debtor is now in good standing as provided for in the Chapter 13 plan.

D. [IF TRUE, THEN:] The Trustee believes that the debtor has carried out their obligations in an acceptable way under the Chapter 13 plan. The payment made on May 1, 2026, should be considered together with all the other payments made by the debtor in accordance with the plan. The payment on May 1, 2026, did not lead to the debtor’s dismissal or conversion.

[IF THE TRUSTEE HAS THE OPINION STATED IN D, THEN:]

The Trustee does not consider the debtor to have defaulted under the Chapter 13 plan because the payment was received on May 1, 2026; the case remains active.

The letter, provided by the debtor for underwriting, provides a record of the debtor’s mortgage payment status. It does not offer any analysis or interpretation of FHA requirements. Under the current plan they have under Chapter 13, you can reach our office at (PHONE NUMBER) or via (EMAIL ADDRESS).

United States Bankruptcy Court

District of [STATE]

OR

Representative of the United States Bankruptcy Court

Title

Offices of the Chapter 13 Trustees

Please include the following statement at the start of the letter. status, the Trustee will likely concur.

The Trustee does not view the debtor as in breach of the Chapter 13 plan due to the payment made on May 1, 2026. However, simply stating that the debtor is “up to date” does not fully address the Trustee’s concerns regarding the plan and payment history.

Include the next statement if you are confident the Trustee’s payment records are accurate.

The Trustee administered the plan without any reported issues.

– The amounts paid were consistent with the confirmed Chapter 13 plan.

When reviewing a borrower’s payment history in a Chapter 13 case, FHA guidelines allow FHA financing if the lender finds the payment record is satisfactory and that payments were made on time with court approval. The May 1 payment counts as on time under FHA guidelines because it was less than 30 days late. Since there is no clear HUD rule about this, the Trustee should not try to interpret FHA policy. Asking for such an interpretation could hurt the application. The Trustee should simply state the facts: the payment was due on April 8 and was accepted on May 1, with no default or enforcement action. The plan is still in good standing. Because of this, the HUD 4000.1 decision can be based on the bankruptcy record rather than the usual process for a credit report that shows a payment more than 30 days late.

Attach this letter, the Trustee’s payment ledger, the confirmed Chapter 13 plan, the confirmation order, and a short letter from the borrower explaining any family health emergency or death. You can also prepare a letter from Gustan Cho Associates to the FHA DE underwriter, referencing HUD Handbook 4000.1 and explaining why the file should be reconsidered.