HUD’s guidelines for late payments on FHA loans are designed to be relatively flexible, allowing borrowers with some credit issues to still qualify for a mortgage. According to the information provided, FHA defines a major derogatory credit event as any payment over 90 days late or three 60-day late payments. However, having a late payment or two on a credit card in the past 12 months does not automatically disqualify a borrower from obtaining an FHA loan.

For those with late payments within the past 12 months, the “12 month rule” in the FHA loan rule book (HUD 4000.1) states that the loan must be “downgraded to a refer” and “manually underwritten”. This means that if a borrower has had late or missed payments within the 12 months leading up to the loan application, the application will require a more detailed review by an underwriter.

Additionally, HUD allows for some leniency regarding collections and charged-off accounts. Non-medical collections in the past 12 months are considered major derogatory credit, but having a late payment or two on a credit card in the past year may still allow a borrower to qualify for an FHA loan.

For borrowers in a Chapter 13 bankruptcy repayment plan, HUD guidelines require 24 months of timely payments to be eligible for an FHA loan. During this period, it is crucial to have been timely on all payments during the plan

In summary, while late payments can impact the approval process for an FHA loan, HUD’s guidelines provide some flexibility, especially for those who can demonstrate that their payment history has improved or that any late payments were due to temporary circumstances.

https://gcamortgage.com/hud-chapter-13-guidelines-with-late-payments/

https://gustancho.com/hud-late-payment-mortgage-guidelines/

• This discussion was modified 7 months, 3 weeks ago by  Sapna Sharma.

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HUD Late Payment Mortgage Guidelines During Chapter 13 Bankruptcy

HUD Late Payment Mortgage Guidelines During Chapter 13 Bankruptcy allow borrowers with late payments during the plan to qualify for FHA Loans