January 22, 2015
A reader asks, “i filed ch 13 in 2012 and my case has been discharged as of Dec 2014. do i have to wait 2 years from that discharge date or the filing date to qualify for FHA?”
FHA loan rules for applying for a new home loan in the wake of a bankruptcy state that there is a minimum seasoning period or waiting period required after the discharge of the bankruptcy. For Chapter 13 bankruptcy, the FHA official site (www.fha.gov) has a Frequently Asked Questions page about applying for a new FHA loan post-bankruptcy, which states the following:
“A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA 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.”
Note that the borrower must ask the court’s permission to enter into a new mortgage agreement. This information is found in HUD 4155.1 Chapter Four, Section C which also includes this:
A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that
–one year of the pay-out period under the bankruptcy has elapsed
–the borrower’s payment performance has been satisfactory and all required payments have been made on time, and
–the borrower has received written permission from bankruptcy court to enter into the mortgage transaction.
Lender documentation must show two years from the discharge date of a Chapter 13 bankruptcy. If the Chapter 13 bankruptcy has not been discharged for a minimum period of two years, the loan must be downgraded to a Refer and evaluated by a Direct Endorsement (DE) underwriter”.
Speak to a loan officer to learn what may be required in a give circumstance, as these types of FHA loan applications would be reviewed on a case-by-case basis.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: