VA LOAN after a CH 13

[mzware]

Hello, I have been under a CH 13 since Jul 2008 and I just sent my last payment to the trustee to cover the last few months. I contacted my loan specialists since there seems to be a lot of conversation about people not being able to purchase a home once their CH 13 discharges until 2 years has past. She has told me that this simply isn't true and that I am fine. The even greater news is that they are requiring credit scores for VA loans to be at least 600. Once she told me this I decided to go ahead and possibly start the process next month when I have my credit card balance a little lower. I am glad that I double checked what she had already told me. As long as my credit score on here is correct then I know I have at least a 600.

[Lel]

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@mzware wrote:
Hello, I have been under a CH 13 since Jul 2008 and I just sent my last payment to the trustee to cover the last few months. I contacted my loan specialists since there seems to be a lot of conversation about people not being able to purchase a home once their CH 13 discharges until 2 years has past. She has told me that this simply isn't true and that I am fine. The even greater news is that they are requiring credit scores for VA loans to be at least 600. Once she told me this I decided to go ahead and possibly start the process next month when I have my credit card balance a little lower. I am glad that I double checked what she had already told me. As long as my credit score on here is correct then I know I have at least a 600.

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I don't know about VA loans, but for FHA loans (another government-sponsored program) it is theoretically possible to obtain a loan while still making payments on a chapter 13 bankruptcy.  There is no requirement that a certain amount of time elapses from the time that someone emerges from chapter 13.  You'd have to check to see if similar rules apply to VA loans.

Keep in mind that even though the loan guidelines for chapter 13 make it possible for borrowers to obtain new loans, it's not a guarantee.  Lenders and underwriters are going to have their own lending criteria, which may be more stringent than the general guidelines put forth by the VA and FHA.

[mzware]

Thanks for the information. Yes I have already checked and was told that no there isn't a certain amount of time that has to have elapsed in regards to VA loans after a Ch 13, but that yes you would have to wait after a Ch 7.

[MovingForward_2012]

Let us know how it goes. I'm very curious. I am not military so I had to do FHA. My BK 13 discharged in Jan 2011, and I couldn't get a mortgage until 2 years after discharge. I tried a couple of different lenders. I was able to qualify a little earlier, last year in October because the Chapter 13 was deleted from my credit reports at that time as it hit the 7 year mark from filing. So if it is removed before 2 years from discharge, you can qualify sooner if a lender has a "2 year from discharge" overlay requirement on both personal BK chapters.

[mzware]

I definitely will. Yeah the loan officer told me that it's simply not true in regards to the Ch 13, so it seems as if some lenders are creating additional guidelines. I'm glad because I have been working on everything now for over a year trying to get in the window to buy right after my discharge. As I stated earlier though once she told me that for VA they are only requiring a 600 I got even more excited because according to myfico I should have at least that. The only issue may be because my cc utilization is kind of high. I decided to go ahead and purchase my furniture for the new home early so that when I moved I wouldnt have additional bills. Then comes this great news sooner than I was expecting. Now I am not quite sure if I want to wait. My DTI is only 5% and if I decrease the credit card it takes me to only 2%.

[andycloses]

VA mortgage lenders require at least a 620 credit score, but it looks like you're OK in that regard anyway.

That being said: You should make sure your potential lender runs your file through the VA underwriting system before too long though. The VA underwriting system is programmed to look more at the other qualifying factors (other than just credit score) when obtaining a mortgage loan than the underwriting systems of other programs.

For example, your ability to pay is heavily scrutinized (the dti and also the residual income, which is calculated by taking into account your income taxes, the property taxes of the home, what type of heat the home your purchase will have, estimated maintenance fees, the square footage of the home being purchased and your family size, just to name a few). Also your employment history and how much money you have to put down will be taken into account. How much money you will have left in reserves after you make the down payment (if any) and pay the loan settlement charges will also be considered.

The VA underwriting system is also big on re-established credit and the underwriting algorithm looks for absolutely no problems making payments on time since a BK is filed/discharged.

And to the FHA borrower from before, the fact that they made you wait two years after discharge on a BK-13 was a misinterpretation of the FHA guidelines by the two lenders....dare I say they sound like they were (are) incompetent!

I get homebuyers FHA mortgages all the time, as long as they are least one year into the plan (don't even need to wait for discharge)...they do need to have BK court approval and be able to qualify with the repayment plan payment, etc.

I do agree that Chap 7 does almost always requitre at least 2 years from date of discharge.

Good Luck!    Andy     

[mzware]

Thank you Andycloses.. I am meeting with the lender on Monday and they only require a 600 credit score for VA loans. She did say that she will send it to manual underwriting for pre-approval. I asked what is their procedure because I have heard some people get pre-approvals and then denied at final underwriting. Since I am almost out of a bankruptcy I am sure that it will be more difficult for me to qualify even though it is a VA loan. She did tell me to ensure that I have no open collections (which I don't), and try to have my cc uitilization at or below 50% of limit. I am a little over in that area, but will be down to about 50% in May. So I am not sure how the underwriter will see this. She did also say that as long as you have reestablished credit that would be good. I only have two credit cards and 3 student loans with 1 paid off and 2 left but with ontime payments. My DTI even with the high cc utilization right now is only 5% so I'm thinking I should be ok with the DTI, just worried about my cc utilization. I have been with the same company now for 5 years and doing the same type work for 11 years. So on Monday I will submit everything to start the process and see where I am. I really had no intentions of purchasing until Jun that way I know my cc utilization would have been really low. We will see at least where I am and if they say I have to wait until I bring down my utilization then I will do that. I'm just glad that I am finally almost done with my BK (datacenter shows case closed 3/22/13), and that I got my score to where someone will work with me. Thanks again

[JM-AM]

Congrats on your hard work and progress...

Bringing down your UTIL will also improve your scores.

Keep following your path you been on, it seems to be working for you and everything will fall in place.

Good Luck with your meeting on Monday

[mzware]

Thank you JM-AM. I will definitely bring it down

[mzware]

Ok...I submitted everything to the lender on Monday and she sent everything forward. She did tell me that my disputed comments on my student loan would have to be removed. So I called and Fed loan states it takes 7 to 10 business days, but that he removed the dispute. I called her today and she said they got a little behind with it being the end of the month. I haven't made any missed payments since 2010, however i started researching what someone said on here about if you filed bankruptcy that you can't have any negative information since filing/discharged. I was thinking since i have no bad history since 2010 that I would fall in the 12 month realm. I asked the lender and she said I can't have any with a balance, and she typed a LOE for my charged off accounts even with the zero balance. Now I am nervous. I am hoping that the underwriter will see that at the time my income decreased due to the location of my job changing (same job, but our pay decreased in 2010 based on location). Anyway in 2011 I have received a promotion and 2 additional pay raises with one in a couple of weeks plus I got married and my income doubled because my DH makes more than me. The lender explained the move and promotion with a LOE. If I have to wait a year out of bankruptcy i guess that is ok.