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FHA after bankruptcy

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twono
Frequent Contributor

Re: FHA after bankruptcy

Ive owned a few homes in my life. Ive been financially responsible for 37 out of 38 yrs that ive had credit. 760 scores and perfect payment history for all those years prior to filing. I ended up having 1 30 day late before filing.

Im building new so a new roof or hvac system wont be an issue for a while...at least i hope not.

My career and occupation will never change. Skilled labor is in high demand. We cant find enough workers for our little $100 mil company.
Message 21 of 34
Anonymous
Not applicable

Re: FHA after bankruptcy

Wow! Sorry. I wasn’t trying to make any assumptions. Sorry to hear that circumstances were that bad to cause so much change within 1 year. Maybe your circumstances would qualify you for the 1 year based on that.
Message 22 of 34
Under_Repairs
Valued Member

Re: FHA after bankruptcy

I know this post is a few months old, but I had to respond to this... I see a lot of posts on this forum regarding time frames for refinancing after a BK DC and most of them are incorrect. There are no FHA guidelines that state you have to wait 2 years post DC to refinance your home; in fact, you can do an FHA refinance during a Chapter 13 plan with the Trustee's & Court's permission. You can literally refinance your mortgage with an FHA loan 1 day after DC if you meet certain criteria - more info on this below. As for "extenuating circumstances," it doesn't have to be because there was a death in the family, you lost your job, or medical bills that resulted from a catastrophic illness. You definitely will be required to write a letter explaining what caused you to file, but it can be for generic reasons that don't fall into the "outside of your control" or "act of God" categories. It all boils down to the lender you are working with and their underwriting guidelines. If you have been discharged from a Chapter 13 and have a solid job, with no late mortgage payments for 12 consecutive months, it is completely doable. Make sure your DTI is below 40% and you have some equity in your house if you want a cash-out refinance... FHA will allow up to 80% of appraised value if you want some cash back. I recently closed on my refinance 2 months post BK DC with a cash-out FHA refinance at 3.5% fixed. It can be done people, so don't let misinformation get you down. Good luck and happy rebuilding!



Current FICO 8 Scores as of 2/13/2022

Current FICO 9 Scores as of 2/13/2022




Message 23 of 34
Scupra
Super Contributor

Re: FHA after bankruptcy

There are too many variables for your reply unfortunately. Chapter 7 vs Chapter 13, refi vs new loan.. Lots of different scenarios here to group into one answer. There is absolute time frames set into place for Chapter 7 new FHA loans for example. Congrats on your refi though, it's a great time Smiley Happy
Filed BK7: 7/2012 (start score EQ 560 / TU 529) Discharge 10/2012
801 EQ FICO 06/2022
797 TU FICO 04/2022
793 EX FICO 04/2022
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Message 24 of 34
Under_Repairs
Valued Member

Re: FHA after bankruptcy

I agree completely on the variables... I should have been more specific. I was talking about Chapter 13 and replying to the OP that I believe was a 13 BK as well. Thanks though, I'm very happy that stressful process is over!!



Current FICO 8 Scores as of 2/13/2022

Current FICO 9 Scores as of 2/13/2022




Message 25 of 34
homeloanexpert
Established Contributor

Re: FHA after bankruptcy

Under_Repairs

 

Great info! But to clarify things, here is the complete rundown for anyone who finds themselves wanting to buy or refinance a home while in  a BK Chapter 13.

 

I have funded hundreds and hundreds of these over the years. The process is pretty simple and straight forward. All government loan programs i.e. FHA, VA and USDA allow for borrowers to purchase or refinance a home while in an active Bankruptcy Chapter 13 as long as you have made the most recent 12 months payments on time (not being 30 days past due) to the Trustee.

 

You will need to provide the Loan Officer a copy of your Voluntary Petition with Schedules and copy of your payment summary to the Trustee. The Loan Officer will take your application, run your credit and review your income and asset documentation. 

 

Providing you meet the lender’s criteria, they will issue you a Pre-Approval spelling out all the details to include maximum sales price, loan amount, maximum interest rate and total payment. In addition, the Loan Officer needs to provide the Court with a copy of your loan application and the fee sheet showing the necessary funds to close.

 

There are two methods of accomplishing a Court Approval. The Court will either except the documents listed above, or they will want the above items in addition to the petitioner be under contract on a home. It just depends on the Court. You will need to ask your Attorney which one is applicable.

 

Your Attorney who will then request a motion to incur debt. The Court should approve your request and issue an approval. In 30 years of doing home loans, I have only seen 1 Judge deny my borrower's petition. The process can take 5 days and up to 1 month depending on the Court.

 

NOTE: There is  NO WATING PERIOD after a Chapter 13 Discharge. Not 1 day!

 

I hope this help!

Branch Manager - Specializing in FHA, VA, USDA, Conventional, Jumbo, Portfolio and Non-QM Loan Products.
Message 26 of 34
Anonymous
Not applicable

Re: FHA after bankruptcy

@homeloanexpert

Message 27 of 34
Anonymous
Not applicable

Re: FHA after bankruptcy

 How does BK7 work for a new home purchase? 

Can a person purchase if they have filed Chapter 7? If so, when?

Chap7BK DC Jan 16, 2019

Thanks in advance.

 

Message 28 of 34
homeloanexpert
Established Contributor

Re: FHA after bankruptcy

@gchance,

 

A 2-year waiting period is what was required for either FHA or VA under normal conditions for a purchase or refinance, it makes no difference. Under extenuating circumstances, you can purchase or refinance as soon as one year under these programs. Extenuating circumstances would be death in the immediate family or serious illness for at least one of the borrowers.

Branch Manager - Specializing in FHA, VA, USDA, Conventional, Jumbo, Portfolio and Non-QM Loan Products.
Message 29 of 34
Anonymous
Not applicable

Re: FHA after bankruptcy

The standard definition for an FHA home purchase is two years from DC and four years for conventional.....so I've been told.  I've also heard of next day lending after DC, but haven't seen any of those banks.

Message 30 of 34
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