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Bankruptcy
Disclosure: HBR is not a lender, legal firm, nor a financial advisor. The information provided
relative to bankruptcy is from one lenders guidelines or FHA's website. Most Lenders are
similar but can have different guidelines. FHA can have one set of guidelines and an approved
lender can institute a different set of guidelines usually based on that lenders investor.
Needed Credit After a Bankruptcy: (from an approved FHA Lender)
If you had prior mortgage history 0x30 in last 12 months (or paid 0x30 in BK 13 plan), then
you would just need 2 more trades, each for 12 months 0x30. You can be last active w/in
24 months and there is no requirement on size of trade. If not Mtg., 12 months canceled rent
checks are OK too. If no housing history, live rent free, would need 2 24 months trades 0x30
AND 2 12 month trades 0x30.
From FHA Website:
Bankruptcy. A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from
obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the
discharge of the bankruptcy. Additionally, the borrower must have re-established good credit
or chosen not to incur new credit obligations. The borrower also must have demonstrated a
documented ability to responsibly manage his or her financial affairs. An elapsed period of less
than two years, but not less than 12 months, may be acceptable if the borrower can show
that the bankruptcy was caused by extenuating circumstances beyond his or her control and
has since exhibited a documented ability to manage his or her financial affairs in a responsible
manner. Additionally, the lender must document that the borrower’s current situation indicates
that the events that led to the bankruptcy are not likely to recur.
A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured
mortgage provided the lender documents that one year of the payout period under the
bankruptcy has elapsed and the borrower’s payment performance has been satisfactory
(i.e., all required payments made on time). In addition, the borrower must receive permission
from the court to enter into the mortgage transaction.
F. Consumer Credit Counseling Payment Plans. Participation in a consumer credit counseling
payment program does not disqualify a borrower from obtaining an FHA-insured mortgage
provided the lender documents that one year of the pay-out period has elapsed under the
plan and the borrower’s payment performance has been satisfactory (i.e., all required
payments made on time). In addition, the borrower must receive written permission from the
counseling agency to enter into the mortgage transaction.
relative to bankruptcy is from one lenders guidelines or FHA's website. Most Lenders are
similar but can have different guidelines. FHA can have one set of guidelines and an approved
lender can institute a different set of guidelines usually based on that lenders investor.
Needed Credit After a Bankruptcy: (from an approved FHA Lender)
If you had prior mortgage history 0x30 in last 12 months (or paid 0x30 in BK 13 plan), then
you would just need 2 more trades, each for 12 months 0x30. You can be last active w/in
24 months and there is no requirement on size of trade. If not Mtg., 12 months canceled rent
checks are OK too. If no housing history, live rent free, would need 2 24 months trades 0x30
AND 2 12 month trades 0x30.
From FHA Website:
Bankruptcy. A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from
obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the
discharge of the bankruptcy. Additionally, the borrower must have re-established good credit
or chosen not to incur new credit obligations. The borrower also must have demonstrated a
documented ability to responsibly manage his or her financial affairs. An elapsed period of less
than two years, but not less than 12 months, may be acceptable if the borrower can show
that the bankruptcy was caused by extenuating circumstances beyond his or her control and
has since exhibited a documented ability to manage his or her financial affairs in a responsible
manner. Additionally, the lender must document that the borrower’s current situation indicates
that the events that led to the bankruptcy are not likely to recur.
A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured
mortgage provided the lender documents that one year of the payout period under the
bankruptcy has elapsed and the borrower’s payment performance has been satisfactory
(i.e., all required payments made on time). In addition, the borrower must receive permission
from the court to enter into the mortgage transaction.
F. Consumer Credit Counseling Payment Plans. Participation in a consumer credit counseling
payment program does not disqualify a borrower from obtaining an FHA-insured mortgage
provided the lender documents that one year of the pay-out period has elapsed under the
plan and the borrower’s payment performance has been satisfactory (i.e., all required
payments made on time). In addition, the borrower must receive written permission from the
counseling agency to enter into the mortgage transaction.
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