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How soon can you qualify for a mortgage after a Chapter 13 Bankruptcy?

April 21st, 2017 by usdaadmin

Can you get a mortgage immediately after discharge of a Chapter 13 Bankruptcy?

With USDA, FHA, VA, or Conventional loans Chapter 13 Bankruptcy waiting periods can be more flexible when compared to Chapter 7.  In today’s video I will explain the differences and qualifying advantages between each program side by side.

Remember, if you need help or a have question that is what we are here for, so just call or email to discuss your scenario because we are known for returning calls, replying to emails, and responding to your messages. Now, wouldn’t it be nice if everyone did that!

How soon can you qualify for a mortgage after a Chapter 13 Bankruptcy?

In many cases a Chapter 13 does not occur due to financial mismanagement, but instead due to third party events and circumstances that are outside of the homeowner’s control.

With that being said, once a Chapter 13 Bankruptcy has been discharged, waiting periods will apply with how quickly you can be able to qualify for a mortgage.

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As a general overview and starting point, here are the differences between a Chapter 7 and Chapter 13 bankruptcy:

  • Chapter 7: You ask the bankruptcy court to discharge most of the debt you owe
  • Chapter 13: You file a repayment plan with the bankruptcy court to pay back all or a portion of your debts over time.

Additionally, because of the required repayment period under a Chapter 13, underwriting guidelines are more flexible with how soon a potential buyer can qualify after discharge.

 Here are the standard Chapter 13 Bankruptcy qualifying guidelines for VA, USDA, FHA, & Fannie Mae:

Conventional loans under Fannie Mae: 2 years from the discharge date

USDA, FHA, and VA Loans will allow financing immediately upon completion of the Chapter 13 repayment plan, which means there is no additional waiting period needed after the discharge date!

Now, due to the short time allowed for mortgage qualifying after completion of a Chapter 13 bankruptcy, more stringent manual underwriting guidelines may apply and additional review will be needed to determine eligibility.

Tampa Florida USDA Approved Lender

When trying to qualify for an FHA loan after a Chapter 13 bankruptcy, remember to be cautious about subsequent deed transfer dates when there was a mortgage included in a bankruptcy, because while FHA bankruptcy guidelines apply after the Chapter 13 discharge date, FHA will then restart their three year foreclosure waiting period from the date the deed officially transfers out of the homeowner’s name!

Thankfully, USDA, VA, and Fannie Mae guidelines are more lenient when a mortgage was included with a bankruptcy and do not restart the foreclosure waiting period based on the deed transfer date.

We realize that qualifying after a Chapter 13 bankruptcy can be complicated, but that is where we step in to help. My team is built to help walk homebuyers through the qualifying  process step by step.

Just simply call or email to discuss your scenario, schedule a convenient call back time, or complete our 1-2-3 online pre-qualifier to get started.

We are able to offer specific experience and expertise on how to qualify for a mortgage after a Chapter 13 Bankruptcy, and  through this, we are able to provide value to the communities we serve.

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

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