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Will Wait for chapter 13 or not?
Am I potentially able to obtain a mortgage at this time? Or do I need to wait 2 years from the date of discharge of my Chapter 13?
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1 Reply
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Alright, so let me clarify what I think you mean in my words so viewers will understand better. Now that I am almost finished with my Chapter 13 Bankruptcy repayment plan, can I qualify for a mortgage or get preapproved? For 60 months, I have made all of the payments on my U.S. Bankruptcy Court approved debt restructured payment plan under Chapter 13 bankruptcy in a timely manner. Or do I have to wait two years after my Chapter 13 Bankruptcy has been discharged?
Congratulations on nearing the completion of your Chapter 13 Bankruptcy repayment plan! The good news is that you can qualify for a mortgage or get preapproved even before your bankruptcy is officially discharged. Here’s how it works:
FHA Loans
- During Chapter 13 Repayment Plan: You can qualify for an FHA loan after 12 months of on-time payments on your Chapter 13 plan.
- You don’t have to wait until the bankruptcy is discharged.
- However, you must obtain permission from the bankruptcy court and the trustee to enter into a new mortgage.
- After Discharge: If your Chapter 13 bankruptcy has been discharged, no waiting period is required to apply for an FHA loan.
- You can apply immediately if you meet the other loan requirements.
- HUD, the parent of FHA, requires that the borrower be manually underwritten if the Chapter 13 bankruptcy has not been seasoned for two years.
VA Loans
- During Chapter 13 Repayment Plan: Like FHA loans, you can qualify for a VA loan after 12 months of on-time payments with court and trustee approval.
- After Discharge: There’s no waiting period after discharge, so you can apply for a VA loan immediately.
- The Department of Veterans Affairs, the federal agency administrating VA loans, requires the borrower to be manually underwritten if the Chapter 13 Bankruptcy needs to be seasoned for two years.
Conventional Loans
- After Discharge: The typical waiting period for conventional loans is two years from the discharge date of your Chapter 13 bankruptcy.
- However, the waiting period is extended to four years if your bankruptcy is dismissed (rather than discharged).
USDA Loans
- During Chapter 13 Repayment Plan: USDA loans also allow you to apply after 12 months of on-time payments with court and trustee approval.
- After Discharge: There is no waiting period after discharge, similar to FHA and VA loans with a manual underwrite.
Steps to Take:
Check Your Credit Report: Ensure your credit report accurately reflects your bankruptcy status and payment history. Discrepancies could affect your ability to get preapproved.
Get Court Approval: If you’re still in the repayment plan, you’ll need approval from the bankruptcy court and trustee to apply for a mortgage.
Speak with a Mortgage Lender: Work with a lender experienced in dealing with borrowers coming out of Chapter 13 bankruptcy. They can guide you through the process and help you understand the requirements.
Preapproval: If you meet the criteria, your lender can preapprove you for a mortgage, giving you a clear idea of how much you can borrow. You don’t necessarily have to wait two years after your Chapter 13 bankruptcy is discharged to qualify for a mortgage. With consistent on-time payments and court approval, you may be eligible for FHA or VA loans before your bankruptcy is officially discharged. It’s important to consult with a lender to understand your options and get preapproved if you meet the requirements.