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Ch7 discharge to FHA mortgage in 12 months possible?

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Ch7 discharge to FHA mortgage in 12 months possible?

Wife and I dischage on 9/20 

 

Basic story is a loing term employer started flaking out, shorting paychecks several hundred a week, and not paying medical AT ALL (self insured). 

 

Our credit took a beating. I had to surrender a car in 2013, and medical debt hit us. Also had a student loan go bad (14k total)=.

 

Ch7 is near done, and we've rectified a lot. I changed employers 2 years ago, and my wife went back to work a year ago part time. She was just promoted to a full time position effective next week. All of our CURRENT expenses are paid on time, and have been for the last 2 years.

 

As of the promotion for my wife, we'll be sitting close to 90k a year. We have no real debt anymore aside from a small consumer loan that reaffirmed and will be paid off in a few months( also been a decent boost in my scores). The student loans will rehab after the discharge according to the current loan holder, and payments will be about $200 for those and according to them (Ascendium) will show in good standing with the rehab.

We're in WI. We would like to buy out the house we're in. It's currently on a lease purchase deal, a friend owns it. But he's less than fun to deal with (always on time and take better care of the house than he did). 

 

How likely are we to be able to get in the 12 month window on FHA? With current income vs expenses, we can easily save a sizeable down payment amount (around $10k if we end up having a car payment, which may need to happen). 

 

What steps shoud we take? I know the 12 month window is if we can show an extenuating circumstance and rectification. Not sure how to even do that considering how this happened, aside from showing that yes, I changed employers and my wife is now also working full time with history at the same company (she'll pass the 2 year mark before the 12 month window). 

 

Is there even a shot? I really don't want to wait the full 2 years if possible, because this dude is giving me massive headaches. Wouldn't even have considered it, but the place we lived at for almost 10 years was sold, and both sides (duplex) got a 30 day notice to vacate for a full remodel. 

 

The house now will have a sell price of about $160k. Lots of updates including new roof, siding, windows, kitchen, wiring, all the majors except furnace and water heater (which are both in good repair). He is theoretically knocking down the price every payment we make, but I'm not sure I trust that at this point.

 

If we dont' take this house, anything else we are looking at would be in the $225k range to be comparable (mostly due to being newer). 

7 REPLIES 7
Established Contributor

Re: Ch7 discharge to FHA mortgage in 12 months possible?

This is a tough one.

 

Extenuating circumstances are very difficult to get accepted/approved, but ask around, if you have qualifying credit score now and sufficient proof of the circumstances that led to the financial problem then you might be able to get approved.     

 

CH. 13 is the BK structure that allows for a consumer to purchase a home while still amid the BK process but you said you were discharged last September 20 from your CH. 7, is that right?

 

 

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 2 of 8
Established Contributor

Re: Ch7 discharge to FHA mortgage in 12 months possible?

You scenario is a little unclear. So I understand, you have a BK Chapter 7 Discharged last year 09/20/2018?

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 3 of 8
Established Member

Re: Ch7 discharge to FHA mortgage in 12 months possible?

No, we discharge next month. We are already on a lease to own contract and in the house. But we want to move over to financed and in our name ASAP. 

 

We have a 5 year option to excersize the purchase, but would REALLY like to do it as soon as we can. And we need to make sure our ducks are in a row to do so. 

 

Basically, is it even possible for us to finalize the purchase in September 2020, or do we have to wait it out until 2021?

 

We've taken a huge increase in salary while maintaining a low cost of living, so monetarily we can do it. Not counting what he deduicts each month from the purchase price, we would have around $10k to $15k ready by next Sept without hitting our emergency reserves or vehicle maintenance funds. 

 

Our scores, despite the bankruptcy, aren't actually too terrible, and pushing them over the 650 in a year should be very doable by following the 700 plan laid out in here. 

 

Also, @homeloanexpert, your signature say you practive in Wisconsin? That's where we'll be doing this. 

 

If I have to wait the 2 years, I will deal with it, but the sooner the better!

 

Message 4 of 8
Established Contributor

Re: Ch7 discharge to FHA mortgage in 12 months possible?

After the Discharge of a BK Chapter 7 depending on the loan program, the waiting can very. Here is a quick rundown.

 

  • NonQM/Portfolio – 1 day after Discharge of BKCH7, Short Sale, or Foreclosure. These loan programs can be a great option providing you have a clear exit strategy loan downline. These programs have a wide variety of options, but do have higher rates and fees and down payment requirements. Interest rates are based on LTV and credit score.
  • VA – 2 years unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 1 year.
  • FHA – 2 years unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 1 year.
  • USDA Rural Development Loan – 3 years, unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 1 year.
  • Conventional – 4 years, unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 2 years.
Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 5 of 8
Valued Contributor

Re: Ch7 discharge to FHA mortgage in 12 months possible?


@homeloanexpert wrote:

After the Discharge of a BK Chapter 7 depending on the loan program, the waiting can very. Here is a quick rundown.

 

  • NonQM/Portfolio – 1 day after Discharge of BKCH7, Short Sale, or Foreclosure. These loan programs can be a great option providing you have a clear exit strategy loan downline. These programs have a wide variety of options, but do have higher rates and fees and down payment requirements. Interest rates are based on LTV and credit score.
  • VA – 2 years unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 1 year.
  • FHA – 2 years unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 1 year.
  • USDA Rural Development Loan – 3 years, unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 1 year.
  • Conventional – 4 years, unless you had an extenuating circumstance like a death in the immediate family or a serious illness, then the waiting period is reduced to 2 years.

Not to highjack OP's thread but would a business failure qualify on the extentuating circumstance?

Ch 7 Discharge 3/12/2018
Cap One QS1 $3,000, Wayfair $5,000, Blaze MC $3,000, Kohls $500
Infiniti Financial lease

AU Cards: CSP $37.7k; Chase Marriott $20k; Discover $7.8k; CapOne Venture $30k
Message 6 of 8
Established Contributor

Re: Ch7 discharge to FHA mortgage in 12 months possible?

@sccredit

 

Here is the FNMA guidelines.

 

FNMA

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 7 of 8
Valued Contributor

Re: Ch7 discharge to FHA mortgage in 12 months possible?

Thanks!

Ch 7 Discharge 3/12/2018
Cap One QS1 $3,000, Wayfair $5,000, Blaze MC $3,000, Kohls $500
Infiniti Financial lease

AU Cards: CSP $37.7k; Chase Marriott $20k; Discover $7.8k; CapOne Venture $30k
Message 8 of 8
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