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Mortgage on Two Investment Homes After Chapter 13 Bankruptcy
Can I get a mortgage for TWO single-family homes ONE year after chapter 13 discharge with 20% down and 733 credit score?
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1 Reply
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Yes, you can get a mortgage for two single-family homes one year after Chapter 13 discharge with a 733 credit score and 20% down. But here are some things to consider:
Main Points:
Type of Loan:
Conventional loan: To qualify for conventional loans on primary, second home, or investment homes, it usually requires a waiting period of two years after Chapter 13 discharge. The waiting period of two years after the Chapter 13 Bankruptcy discharge date can be shortened if there are compensating factors such as high credit scores or a large down payment. However, getting extenuating circumstances to shorten the waiting period is only possible.
FHA loan: If the bankruptcy was dismissed, an FHA loan only needs one year from the date of discharge for eligibility on all chapter types. This includes Chapter 13 Bankruptcy, which is more forgiving than other chapters.
VA loan: VA loans have no waiting period requirements after the discharge date of Chapter 13 Bankruptcy. This holds provided the borrower is eligible for it.
Non-QM loans: Non-QM loans are alternative financing types that do not meet standard lending requirements. There are no waiting period requirements after the Chapter 13 Bankruptcy discharge date on non-QM loans, and they usually have higher interest rates.
Credit Score:
With a credit score 733, you should have no problem getting approved. This is considered good and will increase your chances. This holds especially when applying for conventional or non-qualified mortgages. Lenders have more discretion in making decisions based on their criteria rather than following strict guidelines set by Fannie Mae or Freddie Mac.
Down Payment:
A twenty percent down payment shows commitment and seriousness to the mortgage process. It also reduces risk levels associated with lending institutions. Thus making it easier to qualify for such loans. Another advantage is that there won’t be any need for private mortgage insurance (PMI) required by most conventional home loans if your down payment amount equals or exceeds twenty percent of appraised value.
Lender Requirements:
Different lenders have different policies regarding post-bankruptcy financing options. Exploring as many possibilities as possible within your local area is important before settling on one specific lender. Some lenders can work something out for you even just twelve months after discharge, depending on how financially stable they perceive an individual to be.
Debt to Income Ratio:
Lenders will consider both monthly payments since you’re looking for a mortgage on two different properties. The monthly housing payments should not exceed 40% of your gross monthly income. This is referred to as the debt-to-income ratio (DTI). The debt-to-income ratio is one of many factors mortgage underwriters use in determining how much riskier lending money to any borrower would appear given their unique financial situation at any given time.
Next Steps:
Get Pre-Approved: This step involves applying along with necessary documentation such as proof of income, employment verification, and bank statements, which different lenders may require during their evaluation process.
Speak with Lenders: The best way to find out what loan products are available in your area is to contact multiple lenders specializing in post-bankruptcy financing options. Their experience working on similar cases can help guide you towards making informed decisions regarding which lender might offer more favorable terms based upon individual circumstances involved with obtaining this type of loan product after bankruptcy discharge has occurred.
Consider Different Loan Types: Several types of loans are available. Don’t limit yourself only to conventional mortgages, especially if they seem unlikely within current timelines imposed by Chapter 13 bankruptcy laws. It would help if you also looked into FHA or non-QM (Non-Qualified Mortgage) options since they tend to be more flexible regarding waiting periods after the Chapter Thirteen discharge date. However, expect higher rates compared with traditional home loans.
With a credit score like yours, along with the time since discharge and the amount saved for a down payment, there’s no doubt about being able to finance two single-family homes at this point, especially if working alongside ideal mortgage providers.