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HUD CHAPTER 13 BANKRUPTCY GUIDELINES
Can anyone help me understand the HUD Guidelines on Chapter 13 Bankruptcy for FHA loans. Can you get approved for an FHA loan while in a Chapter 13 Bankruptcy. The Chapter 13 Bankruptcy has not been discharged.
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2 Replies
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Yes you can buy a home. After 12 months and no late payments ever while in the BK.
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FHA and VA loans are the two only mortgage loan programs that allow homebuyers and homeowners eligible for a home purchase or a refinance mortgage loan while in a chapter 13 bankruptcy repayment term without the repayment being paid off. All other mortgage loan programs including non-QM loans require the Chapter 13 bankruptcy to have been discharged.
Some loan programs like conventional loans have waiting period after chapter 13 bankruptcy discharge or Chapter 13 bankruptcy dismissal date. HUD, the parent of FHA, and the veterans adminstration guidelines guidelines on Chapter 13 bankruptcy is almost identical with a few minor changes. Borrowers can qualify for an FHA and VA loan during Chapter 13 Bankruptcy one year after the filing date of the Chapter 13 bankruptcy with the bankruptcy trustee approval. The borrower cannot be on any payment while in Chapter 13 bankruptcy unless they was a death of the major wage earner or major illness such as stage four cancer or equivalent extentuating circumstances. Both HUD and VA require the file go through manual underwriting during Chapter 13 Bankruptcy because the mortgage loan application will not render an approve/eligible per automated underwriting system. Manual underwriting guidelines on FHA loans require two years timely payments of the borrower on all monthly payments. VA requires one year of timely payment on all monthly payments in the past 12 months. The best way to explain the HUD Chapter 13 Bankruptcy guidelines and VA Chapter 13 bankruptcy guidelines is by posting detail guides written by Gustan Cho Associates or its subsidiary publishers. Here is the FHA Chapter 13 Bankruptcy Guidelines on FHA Loans: