FHA Loans After Bankruptcy Waiting Period Guidelines And Requirements

by Michelle McCue

This ARTICLE On FHA Loans After Bankruptcy Waiting Period Guidelines And Requirements

We will be discussing FHA Loans After Bankruptcy Waiting Period Guidelines And Requirements for homebuyers on an FHA purchase loan and for homeowners on FHA refinance mortgages.

HUD, the parent of FHA, is the federal agency that is in charge of setting up the ground rules and agency mortgage guidelines on FHA loans. FHA loans are one of three government-backed home mortgage programs available in the U.S.  FHA loans is one of the most popular home mortgage programs in the United States. HUD’s mission is to promote homeownership for hard-working Americans and have them able to be able to purchase a home. with a 3.5% down payment with a minimum of a 580 credit score. HUD makes qualifying for an FHA loan easy. FHA loans are very popular for first-time homebuyers with limited or no credit established. HUD makes it possible for homebuyers with a prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, and period of bad credit to be able to qualify for an FHA loan.

Importance Of Rebuilt And Reestablished Credit After Bankruptcy And A Housing EventWhat is the significance of a rebuilt and restored loan after bankruptcy and housing event

HUD and lenders realize and fully understand people can have periods of a financial crisis. It can be for many reasons. People can lose their jobs, have medical issues, go through a divorce, have a death in the family, or have other extenuating circumstances. People can go through bankruptcy and/or foreclosure due to the economy, loss of business, or loss of jobs. However, eventually, people recover. Hardworking Americans will recover stronger than ever and most will want to purchase a home for their family.

The Role Of HUD 

HUD wants to make homeownership possible for people who had prior financial issues, a prior bankruptcy and/or foreclosure, or other extenuating circumstances. HUD and mortgage lenders want to see people have rebuilt and reestablished their credit after a period of bad credit. Timely payments in the past 12 months are key in getting an approve/eligible per automated underwriting system (AUS). People can qualify for an FHA loan after bankruptcy and/or a housing event. However, FHA Loans After Bankruptcy Waiting Period Guidelines state borrowers need to meet the minimum waiting period requirements.

In this article, we will discuss and cover FHA Loans After Bankruptcy Waiting Period Guidelines And Requirements.

Types Of Bankruptcy

There are many different types of bankruptcies. However, the two most common bankruptcies for consumers are Chapter 7 and Chapter 13 Bankruptcy. FHA Loans After Bankruptcy Waiting Period Guidelines are different between Chapter 7 versus Chapter 13 Bankruptcy. HUD, the parent of FHA, and mortgage companies understand people can go through financial difficulties during periods of their lives. A financial crisis can happen to anyone. Poor, middle class, the rich. It can happen to any hard-working American worker. Over 54% of consumers file bankruptcy in the United States due so because of medical debts incurred. Other common reasons for filing bankruptcy are job loss and extended unemployment, loss of business, death in the family, divorce, or other extenuating circumstances.

Chapter 7 Bankruptcy Explained

Chapter 7 Bankruptcy is the most common type of consumer bankruptcy. Chapter 7 Bankruptcy is also referred to as total liquidation and benefits people with no job and/or in-between jobs and little to no assets. There is a maximum income cap to be eligible to file Chapter 7. Under the U.S. Bankruptcy Code, you can keep exempt assets and a certain amount of assets and still file Chapter 7 Bankruptcy.

Chapter 13 Bankruptcy Explained

Chapter 13 Bankruptcy is a repayment plan over a course of three to five years. Chapter 13 Bankruptcy benefits people who have jobs and assets but need to restructure their debts. A trustee is assigned by the Bankruptcy Court. The trustee will restructure the petitioner’s debts. A percentage of the petitioner’s monthly wages and allocates that portion to pay creditors. Most Chapter 13 Bankruptcy repayment plans are for 60 months. After the 60 months is over, the remaining outstanding debts of all creditors are discharged. We will discuss and cover the FHA Loans After Bankruptcy Mortgage Guidelines later in this article.

Qualifying For FHA Loans After Bankruptcy

How to qualify for FHA loans after bankruptcy

FHA loans is the most popular home mortgage program in the nation. HUD’s mission is to make homeownership affordable for hard-working Americans. This is why HUD created very lenient agency mortgage guidelines. FHA loans are perfect for first-time homebuyers who have little to no credit established, borrowers with lower credit scores. and prior bad credit, borrowers with a prior bankruptcy and/or foreclosure, and homebuyers with little money for the down payment and closing costs on a home purchase. Many people go through financial difficulties where they file for bankruptcy. There is life after bankruptcy.

Bankruptcy Explained

Bankruptcy is a federal law that helps Americans eliminate and discharge debts and get a financial start. You can become a homeowner after bankruptcy. You can have great credit after bankruptcy. Gustan Cho Associates have helped countless people achieve credit scores over 700 FICO in less than one year after the bankruptcy discharged date. Homebuyers can qualify for an FHA loan in just two years after the Chapter 7 Bankruptcy discharged date. People in the Chapter 13 Bankruptcy repayment plan are eligible to qualify for an FHA loan during the Chapter 13 repayment period after they have made 12 timely monthly payments. Chapter 13 Bankruptcy does not have to be discharged. There is no waiting period after the Chapter 13 Bankruptcy discharged date to qualify for an FHA loan. The team at Capital Lending Network, Inc. are experts in helping homebuyers qualify for an FHA loan during and after Chapter 13 Bankruptcy.

HUD Guidelines On FHA Loans After Chapter 7 Bankruptcy

Per HUD Handbook 4000.1, mortgage borrowers are eligible to qualify for an FHA loan after two years from the discharge date of Chapter 7 Bankruptcy discharged date. Just passing the two-year waiting period does not guarantee an FHA loan approval. Both the automated underwriting system (AUS) and lenders want to see borrowers have rebuilt and reestablished and rebuilt their credit. Late payments after bankruptcy and/or foreclosure are frowned upon and will present a problem. Borrowers should get three to five secured credit cards after the Chapter 7 Bankruptcy discharge date. Secured credit cards are the easiest and fastest way of rebuilding and re-establishing your credit after bankruptcy.

HUD Guidelines On FHA Loans During Chapter 13 Bankruptcy Repayment Plan

What are the HUD guidelines for FHA loans during a Chapter 13 bankruptcy payment planMortgage loan applicants are eligible to qualify for FHA loans during the Chapter 13 Bankruptcy repayment plan. However, in order to qualify, the borrower needs to have been in the repayment plan for at least 12 months and have made 12 timely payments to the bankruptcy trustee. Chapter 13 Bankruptcy does not have to be discharged. The bankruptcy trustee needs to sign off the new home purchase and mortgage which is never a problem. The team at CLN never had an issue with a bankruptcy trustee not signing off on a home purchase and/or mortgage on a home purchase and/or a refinance. All FHA loans being processed during Chapter 13 Bankruptcy repayment plan are manual underwrites. HUD Manual Underwriting Guidelines apply. Capital Lending Network, Inc. are experts in helping borrowers qualify for FHA loans during Chapter 13 Bankruptcy repayment plan. CLN is one of the very few national mortgage companies with no lender overlays on government and conventional loans.

HUD Guidelines On FHA Loans After Chapter 13 Bankruptcy Discharged Date

Mortgage loan applicants can qualify for an FHA loan after the Chapter 13 Bankruptcy discharge date with no waiting period requirements. There are no waiting period requirements after the Chapter 13 Bankruptcy discharge date. However, any borrowers with Chapter 13 Bankruptcy discharge that has not been seasoned for at least two years need to be manually underwritten. Borrowers need to meet all other HUD Agency Mortgage Guidelines. Timely payments during and after Chapter 13 Bankruptcy will be closely looked at by mortgage underwriters. Late payments during Chapter 13 repayment and/or after the discharged date may disqualify borrowers. One or two late payments during and/or after Chapter 13 Bankruptcy is not always a deal killer.

Contact Us At Gustan Cho Associates dba Capital Lending Network, Inc. To Qualify For A Mortgage With No Lender Overlays

The team at Capital Lending Network, Inc. have helped thousands of borrower during and after Chapter 13 Bankruptcy. Rebuilt and reestablished credit is very important for those who went through Chapter 13 Bankruptcy. Get three to five secured credit cards with at least $500 credit limits. Secured credit cards are the easiest and fastest way to rebuild and re-establish credit after bankruptcy. Get one or two installment loans on top of the three to five secured credit cards to maximize your credit profile. CLN has credit guides to help you achieve this goal.

Click on the following resource links below that helped many of our viewers and clients at Gustan Cho Associates dba Capital Lending Network, LLC.


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Michael Fitzgerald November 6, 2020 - 1:01 am

I just spoke with Michelle McCue from Gustan Cho Associates at the Lombard, Illinois office and Michelle told me that Capital Lending Network offers one day out of bankruptcy and foreclosure is available at Capital Lending Network, Inc. with 30% down payment. Do you have a minimum credit score requirement? I have Michelle McCue’s number so I guess if I do not hear back on this forum, I can text her. Thank you.

Rita Waller November 7, 2020 - 12:33 am

I am in the process of closing a FHA refi with Rocket. I had a barrage of family issues surface over the last month. In August my bank account got hacked and I thought I updated all of my auto pays with the new information, turns out I neglected to do so on a Chase card and has now been reported 30 days late – my Fico 8 is at down to 633, from 673, my Fico 2 is 573, which I believe mortgage companies use. On top of that, I made another clerical error (first time in 15 years) I sent in $700 to my mortgage company instead of $1700, I forgot the 1. The bank caught the error an called me on 11/5, I fixed and was told that it would not be reported as late. However Rocket Mortgage asked me for my bank statement for Oct., which will show I underpaid. They are going to send me a receipt to show I satisfied the amount due. At this point the lender told me not to worry about the mortgage payment, but they monitor credit scores. Did I just jeopardize my refinance? I am supposed to close next week. PLEASE HELP.

Harry Carnizares November 7, 2020 - 12:36 am

Hello Gustan Cho Associates and Capital Lending Network mortgage experts:
I recently watched your youtube videos on FHA loans (https://www.youtube.com/watch?v=yLhLNkBf_SI). My apartment lease ends in June 2021. At that time I intend on purchasing a 3 unit multifamily home in Chicago (Bridgeport). I graduated from the University of Michigan in May 2020 and began my full-time job at Google in September 2020.
I have Zero debt (No student loans, car payments, credit card debt).
I have a 750 credit score. I make $68,000 a year base salary, a $9,750 annual bonus, and receive annual Google equity (RSUs) $9,375.
I currently have $15,000 in savings and by June 2021 expect to have at least $25,000 in savings for a downpayment.
I want to buy a 3unit multifamily home in Chicago’s Bridgeport area. I need to be approved for an FHA loan of around $550,000 in order to make this happen.
With the information I provided you do you believe this is reasonable? If so I would love to hear possible next steps.

Michelle Marino November 8, 2020 - 7:44 pm


I am Looking to either sell my home in 2021 after my taxes are filed or refinance a private mortgage I have on my townhome. I have a few questions and I was hoping you could help answer them. I will summarize my financial situation as it doesn’t make sense to do a mortgage application until after I file my 2020 taxes.

My credit scores from the 3 agencies are 718 -779 with the mid score being 778.
I’ve owned a Preschool (S-Corp) since October 2017 and I am also a self employed financial advisor. Preschool sales ytd is $481,200. I have been on unemployment since April due to COVID because I qualified based on how COVID affected my business. My business has still been functioning and I will be off of it soon now that the preschool is out of the troubled waters of COVID and the school is showing a monthly profit.

Here is a breakdown of my personal earnings:

2019 income
1. COUGAR School inc w2 $13,560
2. COUGAR school s Corp income $14,298
3. Sole proprietor financial advisor -644
4. Wells Fargo financial advisor w2 $15,272 (left in March 2019 to go independent. I’ve Been a financial advisor for 13 years but left the bank as w2 employee and went independent to 1099 income)

Total: 42,486

2020 income projections
COUGAR school inc w2 8,875
COUGAR school a Corp 98,000
Sole proprietor financial advisor $5000
Unemployment income approx $16,000

Total: 127,875

Current property:
30 year private mortgage balance $231,828 @ 5%
No late payments
Approximate value $250,000

My debt:
Mortgage/taxes/insurance/hoa $1850
Auto loan $605
Credit card $300 per month (I can pay these off or transfer them to a line of credit to reduce or eliminate this debt.
School loans: $100

Total: $2855 per month

With DTI of 55% I believe underwriters would require proof that I can earn an average of $62,290 annually over 2019 and 2020 to be approved for an FHA refinance.

I have a few questions.

1) Does being on unemployment due to COVID but not actually unemployed affect my ability to get a loan? Is there a waiting period to be off of unemployment when you still owned a corporation during that time? Again, by the end of the year my Corp will show a $98,000 profit even though I was on employment for a while when things were really bad with COVID.

2) In regards to my financial advisor income, would the underwriter include the w2 income from Wells Fargo for the two year average with my sole proprietor income?

3) What is the LTV for an FHA refinance for a private mortgage?

4) It is my understanding you can’t qualify for an FHA loan solely off of your w2 income when you own the s corporation until you have been in business for 5 years. Is that correct?

5) Is there any other loan program that may work better for me in theses circumstances other then FHA?

Thank you for your help!

Susie Sells Homes November 3, 2021 - 4:48 pm

Hello Mr. Cho,

Just curious as to whether or not you may be able to help me get an FHA loan during my Chapter 13 bankruptcy? I am a little over two years into my chapter 13 bankruptcy and all payments have been on time. I am currently under contract to sell my first home as I had to relocate for family medical issues. What are the chances of me qualifying for an FHA loan during this time?

Walter Danser November 4, 2021 - 6:33 pm

My husband is a veteran and we currently have a VA home loan. We want to sell our current home and buy a different one. Our credit is very bad- his is 526 and mine is 484. Is there ANY way possible that we could get approved for a home loan?

Barbara Rempert November 5, 2021 - 12:50 pm

I am looking to purchase a multifamily investment property with a NON-QM loan.

Ashley Cho November 7, 2021 - 5:30 pm

Interested in a OTC loan. I need to know if you have any seasoning requirements for FHA.

Elizabeth Mass November 8, 2021 - 9:36 pm

Are you certified in New York State? If not, can you recommend someone?
Thank you for your time and help.

Gustan Cho November 9, 2021 - 2:48 pm

I will have George Makoutz call you shortly

Mike Loniski November 8, 2021 - 11:00 pm

Good morning,
We would like to know if you are licensed in Arizona.
We are in Chapter 13 and looking to refinance. We owe 15,000 in arrears. My husband is a veteran.

Sandra Milner November 8, 2021 - 11:31 pm

Been turned down by several lenders. 63K salary with a 633 middle credit score. I watch all your YouTube videos online

Daniel Dug November 9, 2021 - 1:49 pm

Looking to purchase a new home. Currently in a chapter 13 repayment plan. Have co-borrowed

Gustan Cho November 9, 2021 - 2:33 pm

I will have my Associate Michelle McCue connect with you. Please email your contact information at gcho@gustancho.com.

Seth Richards January 4, 2022 - 6:19 pm

We were working with Dale previously, but he may have fallen out of touch. We haven’t heard from him since around October of 2021, we are looking for a VA loan and want help moving forward with the process if we could. I can be reached anytime at the number listed in this document.

Gustan Cho January 4, 2022 - 7:04 pm

I will have Michelle McCue call you shortly.


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