This is an expanded answer to the question about Previous Bankruptcy Guidelines for Mortgage Loans and folks who want to use the NC Affordable Housing / First time Home Buyer Program Grant
Can I use the NC First time Home Buyer Program if I had a Bankruptcy? Guidelines for the First Time Home Buyer Program Mirror those established by the Government Underwriting Agency, the exception being that you can qualify with 2 credit scores over the 640 minimum credit score mark.
- FHA Guidelines for Chapter 7 BankruptcyAt least two years must have elapsed since the discharge date of the borrower and / or spouse’s Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.
- If the Chapter 7 Included A Residence
FHA insured mortgages are generally not available to borrowers whose property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years. However, if the foreclosure of the borrower’s main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit…This does not include the inability to sell a home when transferring from one area to another.
- FHA GUIDELINES for Chapter 13
FHA will consider appoving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee’s written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.
That’s the guideline… have we EVER seen a Trustee approve this? No.
VA loan guidelines call for a 2 year waiting period after a Chapter 7 bankruptcy before you can receive VA financing again. There are rare circumstances in which the 2 year waiting period will be reduced to 1 instead. You would have to be able to show that circumstances beyond your control were the driving force behind your financial hardship. For instance, we’ve seen this done when a spouse died… we also had a situation where a couple had children that were less than 12 months apart in age, and the wife could not afford childcare and had to quit her job. If you can prove the extreme circumstance – then we might be able to make it work after the 12 month waiting period. NOTE: Base Transfer and Divorce do NOT count as reasons to allow less than 2 years. We have NOT seen the 2 year waiver EVER given when a residence was included in the Bankruptcy.
- VA LOAN GUIDELINES for Chapter 13 Bankruptcy
Like FHA Guidelines, Veterans and military personnel can qualify for a VA mortgage loan, based upon current guidelines, even when they are still in Chapter 13 bankruptcy. However, you will have to show that you have made a minimum of 12 payments on-time and be approved by the court trustee for the new mortgage loan. This is VERY, VERY RARE…
- USDA LOAN GUIDELINES for Chapter 7 and Chapter 13 Bankruptcy
USDA Underwriting Guidelines are the most STRICT Guidelines. Any Chapter 7 or Chapter 13 Bankruptcy must be discharged for 3 years. This is important if you are counting the days. You will need to see when your Discharge papers are filed, and we will need a copy of those, to be sure that we are not closing prior to that date.
Meet these guidelines? We’d love to help you buy a house in NC! Tired of Renting and ready to buy a home in NC, please call Steve and Eleanor Thorne 919 649 5058 we offer today’s best mortgage rates, and we know what Underwriters in NC are looking for! Connect with us on Facebook!