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USDA Loan without Spouse's Bankruptcy

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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
Valued Contributor

Re: USDA Loan without Spouse's Bankruptcy


@chuchuck 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
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.

Filed Chapter 7 on 4/4/17 Discharged on 7/20/17
Scores after Discharged: EX 567, EQ 580, and TU 559
Current scores: EX 665, EQ 682, and TU 668

Cards in my wallet: Quicksilver One $1,000.00 Merrick Bank $1,500.00 First Premier $825.00 Credit One $950.00 Kohls $700.00 Victoria Secret $500.00 NY & Company $750.00 Williams Sonoma store card $2,500.00 PayPal Credit $1,500.00 Alphaeon Credit $6,000.00

Patiently waiting for my inquiry count to decrease so I can get rid of these subprime cards...After 2 years of rebuilding & paying unnecessary fees it is definitely time for an upgrade
Message 3 of 9
Member

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
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
Established Contributor

Re: USDA Loan without Spouse's Bankruptcy

Your only problem was you went to the wrong lender.

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 6 of 9
Member

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
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.

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 8 of 9
New Member

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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