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USDA Loan without Spouse's Bankruptcy

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Anonymous
Not applicable

USDA Loan without Spouse's Bankruptcy

My wife is trying to get approved for a USDA loan for our first house and were just denied pre-approval.

I filed chapter 7 less than 2 years ago, before I met my wife, and we knew it would prevent me from being on the loan.

Everything we have read suggested that if she was the only one on the loan, then my bankruptcy shouldnt make a difference, but the mortgage company just told her that is the reason we were denied.
Her credit score is 730, she has very little debt, and a stable job/work history.

Has anyone been in the same situation? 

 

EDIT: We live in Missouri.

Message 1 of 9
8 REPLIES 8
VALoanMaster
Valued Contributor

Re: USDA Loan without Spouse's Bankruptcy


@Anonymous wrote:

My wife is trying to get approved for a USDA loan for our first house and were just denied pre-approval.

I filed chapter 7 less than 2 years ago, before I met my wife, and we knew it would prevent me from being on the loan.

Everything we have read suggested that if she was the only one on the loan, then my bankruptcy shouldnt make a difference, but the mortgage company just told her that is the reason we were denied.
Her credit score is 730, she has very little debt, and a stable job/work history.

Has anyone been in the same situation? 

 

EDIT: We live in Missouri.


How did the lender find out that you filed a chapter 7? 

You need a new lender.

Feel free to PM for help or info.

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 2 of 9
kiea
Frequent Contributor

Re: USDA Loan without Spouse's Bankruptcy

I think you have to wait 3 years with USDA.

 

If she is getting the loan by herself then your credit should not matter.  That doesn't sound right.  Maybe you should talk to the loan officer again.

Start of rebuild July 2021

January 2022
Message 3 of 9
Anonymous
Not applicable

Re: USDA Loan without Spouse's Bankruptcy

I can't find much on the USDA loans but I've read that FHA will consider after 2 years after filing.   However, you should be able to get a loan under just one person and the chapter 7 shouldn't affect the others credit or loan factors. 

Message 4 of 9
JVille
Valued Contributor

Re: USDA Loan without Spouse's Bankruptcy

On a USDA Loan they have to consider “Household” income. So you may not be on the loan but your income IS being looked at to decide if your combined income exceeds the max. Program limits. So it may not have been your BK that was the issue but rather your income pushing you over the USDA limits. This is a rural low income program.
Message 5 of 9
homeloanexpert
Established Contributor

Re: USDA Loan without Spouse's Bankruptcy

Your only problem was you went to the wrong lender.

Branch Manager - Specializing in FHA, VA, USDA, Conventional, Jumbo, Portfolio and Non-QM Loan Products.
Message 6 of 9
Anonymous
Not applicable

Re: USDA Loan without Spouse's Bankruptcy


@homeloanexpert wrote:

Your only problem was you went to the wrong lender.


Agree with you on this.  Only in communial states would a spouse not on the loans credit be a problem.   We live in Arkansas and of course my husband isn't on the loan because of his credit plus what's on it.  His income was included but not his credit. 

Message 7 of 9
homeloanexpert
Established Contributor

Re: USDA Loan without Spouse's Bankruptcy

The USDA RDL is a quirky loan. They will actually factor in all the household income, including a minor's income (even though that child is not going on the loan). Years ago I got careless on a file and didn't ask if the borrower's son worked. He in fact was a pizza deliver guy and had only been on the job for 3 months. It didn't matter. That kid's income was factored in the mix.

Branch Manager - Specializing in FHA, VA, USDA, Conventional, Jumbo, Portfolio and Non-QM Loan Products.
Message 8 of 9
Anonymous
Not applicable

Re: USDA Loan without Spouse's Bankruptcy

USDA's BK requirements are 3 years, but I'd talk to a different lender or LO.

Message 9 of 9
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