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Chapter 13 - 1 Year In & FHA/USDA Home Loans HELP

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New Member

Chapter 13 - 1 Year In & FHA/USDA Home Loans HELP

Hey Everyone,

 

So I am coming up on my 1 year in a Chapter 13 bankruptcy and I am interested in purchasing a home in Ohio where I reside. I 've never owned any property. 

 

I have never been late on any of my Chapter 13 payments. My base income is $72,000 but at times could be more I have made up to $106,000.

 

I have worked on rebuilding my credit since the filing. I have 3 credit cards obtained since the filing with CLs of $400, $500 and $1000. I use them and pay them off keeping the utilization under 10%. 

 

My credit score initially was in the 480s. I have had a lot of old debt fall off, debt paid off as well as inquiries fall off on my credit report. I work daily to see what I can do to improve my score. Currently Credit Karma is reporting above 600 for both Equifax and TransUnion. 

 

I do have $90,000 in student loans that are reported as deferred in my bankruptcy. Those loans are from my Bachelors, Academy and I am working on my 2nd Masters Degree. 

 

So I guess my question is would I qualify for FHA or USDA financing and what would those terms look like? I think I have read with a 580 your down payment would be 3.5% but I don't really understand the PMI aspect of the financing and the exact qualification requirements. 

 

I am looking for a lender that would be wiling to do a pre-approval so I would at least have an estimate of cost for purchasing a house I could afford based on the numbers.  Also, I would need to find a loan officer that has worked with someone in my situation with bankruptcy, student loans and government loans.

 

Does anyone have any recommendations or been approved for a mortgage in a Chapter 13 at the end of the 1 year mark with student loans? Or can you refer a LO or company who could at least look at my credit and situation and help me figure out what I need to do in order to get approved. 

Chapter 7
Filed 9/18/2013
Discharged 1/21/2014

Chapter 13
Filed 6/22/2017
Still repaying......

FICO Score 8
Equifax - 549 - 8/29/18
Transunion - 530 - 8/28/18
Experian - 559 - 8/26/18

Goal scores - 750

First Premier - Opened 8/5/18 - $1000
First Premier - Opened 6/30/17 - $300 to $400 on 8/3/18
Capital One - Opened 5/19/18 - $500 to $600 on 8/28/18
Discover Secured - Opened 8/28/18 - $200
Fingerhut - Opened 6/24/18 - $300
Loft - Opened 8/18/18 - $250
New York and Company - Opened 8/18/18 - $250
Victoria Secret - Opened 8/18/18 - $250

Credit Utilization is at 8% overall.
Gardening starts now...
4 REPLIES 4
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Valued Contributor

Re: Chapter 13 - 1 Year In & FHA/USDA Home Loans HELP

I did not do it, but I do understand you can get financing while in payment, but I thought you had to be two years in and be able to show at least 12 months of on-time payments to the trustee. And then, of course, trustee approval. I considered purchasing a house while Iw as in repayment but all the terms and interest I was quoted made me shy away. I waited until a year after discharge and got a much better deal.

 

I don't think you are going to be able to qualify for USDA unless the median wage in your location is a lot higher than most places in the country.

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 5/28/20:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 2 of 5
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Contributor

Re: Chapter 13 - 1 Year In & FHA/USDA Home Loans HELP

I think you'll have a hard time finding a lender that will approve an FHA loan with a median score under 620. So I'd work on getting your scores up first. VA is about the only thing available for those with scores under that.

 

And CK scores are worthless. They are Vantage scores. You'll need to know what your FICO mortgage scores are.

 

From what I recall, FHA only requires 12 months of on-time payments and trustee approval, so you'll be ok there. Just make sure you have NO lates as of your BK filing.

Message 3 of 5
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Valued Member

Re: Chapter 13 - 1 Year In & FHA/USDA Home Loans HELP

I am in the same boat. I am coming up on a year in my chapter 13 in November and looking to purchase a home in March with a FHA loan. I am hoping to continue to get my scores up and get my median score to as close as 620 as possible.

Starting scores Pre-Filing: High 400s. Gardening Until 06.2019.Utilization 3%/AZEO.
Current FICO 8 Scores as of 04.01.19:


$1000 SDFCU Secured Credit Card | $500 SDFCU Secured Shared Loan | $550 Credit One Card | $300 First Premier Bank Card
Message 4 of 5
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Established Contributor

Re: Chapter 13 - 1 Year In & FHA/USDA Home Loans HELP

Get your FICO credit scores from MyFico or from Credit Check Total's site...$1.

Current Scores & Increase since May 2020:

EX: 701 (+38)| TU: 692 (+32)| EQ: 681 (+36)| TU Fico 9: 704

Next Goal: Min. 700 w/all CRAs

Subsequent Goal: Chase FU

Gardening Until: 06/01/2021| App: 5/26/2020
Message 5 of 5
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