Mortgage Options After Bankruptcy - VA Streamline Refinance Lenders

In this article, we will discuss and cover a FAQ on my mortgage options after bankruptcy. We will also cover the automated underwriting system (AUS) and manual underwriting guidelines on FHA and VA loan approvals. Mortgage loan applicants can get loan approvals with credit scores down to 500 FICO on FHA and VA loans with an approve/eligible per AUS or if they are eligible for manual underwriting. FHA and VA loans are the only two mortgage loan programs that allow manual underwriting on home loans.

Many people think they can not get a mortgage with bankruptcy. When asked what are my mortgage options after bankruptcy, the soonest loan programs borrowers can qualify for are FHA and VA loans. With trustee approval, you can qualify for an FHA or VA loan one year into the repayment program. Non-QM lenders often require bankruptcy discharge.

No other mortgage loan programs allow manual underwriting. However, the key to getting an approve/eligible per automated underwriting system (AUS) approval on lower credit scores is to have been timely on all monthly payments in the past 12 months. Manual underwriting guidelines are the same for FHA and VA loans. Borrowers who cannot approve/eligible per AUS and get a refer/eligible per AUS can qualify for manual underwriting on FHA and VA loans. Borrowers must have been timely with their monthly payments in the past 24 months to be eligible for manual underwriting.

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What Are My Mortgage Options After Bankruptcy To Get Pre-Approved

One of the most important things borrowers with lower credit scores and prior bad credit need to understand is agency guidelines versus lender overlays. Agency mortgage guidelines are the minimum lending requirements by the individual mortgage agency such as HUD, the VA, USDA, Fannie Mae, and Freddie Mac. This determines whether or not borrowers qualify for a home mortgage per the individual agency on FHA, VA, USDA, and Conventional loans.

Mortgage companies can have additional lending requirements above and beyond the minimum agency guidelines of HUD, VA, USDA, Fannie Mae, and Freddie Mac. These additional lending requirements are called lender overlays. Mortgage companies can have lender overlays on just about anything and everything.

Typical overlays include lender overlays on credit scores, outstanding collections, charged-off accounts, and debt-to-income ratios. Not every mortgage lender has the same kind of overlay. For example, one lender may have a credit score overlay 620, while another will have a credit score overlay of 640. Therefore, it is very important to understand the minimum agency guidelines on FHA and VA loans versus what a lender may tell you about their minimum credit score requirements. Gustan Cho Associates has a no-lender overlay business model on government and conforming loans.

What Are Lender Overlays on Government and Conforming Loans?

Gustan Cho Associates is one of the few mortgage brokers licensed in multiple states with a business model of no lender overlays on government and conventional loans. Gustan Cho Associates has over 210 wholesale mortgage lending partnership agreements. We have every mortgage loan product you can think of. Over 80% of our borrowers could not qualify at other mortgage companies. We will explain in detail what lender overlays are in the following paragraphs. Dustin Dumestre of GCA Mortgage Group explains what lender overlays are:

Lender overlays are additional lending requirements above the minimum guidelines of HUD, VA, USDA, Fannie Mae, and Freddie Mac the lender has. Therefore, just because you meet agency guidelines on government and conventional loans, you may not meet the lender overlays of the individual lender.

Most mortgage companies have lender overlays on government and conventional loans. Gustan Cho Associates was founded on the mission and philosophy of being able to originate and close loans other lenders cannot due to its no lender overlays policy. Gustan Cho Associates strives to honor our no-lender overlay policy on government and conventional loans. This holds especially true with FHA and VA loans.

Mortgage One Day Out of Bankruptcy and Housing Event

Gustan Cho Associates has a national reputation for being able to do loans other lenders cannot do. Over 80% of our borrowers could not qualify at other lenders. We are experts in helping homebuyers qualify for a mortgage during or after bankruptcy. Gustan Cho Associates has a unique loan program where homebuyers can purchase a home one day out of bankruptcy or a housing event. A housing event is one of the following:

Foreclosure
Deed-in-lieu of foreclosure
Short-sale
Mortgage included in bankruptcy

Gustan Cho Associates is one of the very few lenders in the country that consistently originate and close FHA and VA loans with lower credit scores. Most mortgage companies will require a minimum credit score of 620 to 640 FICO on FHA and VA loans. This holds true even though HUD, the parent of FHA, allows borrowers with credit scores down to 500 FICO to qualify for FHA loans.

FHA And VA Guidelines Comparison To Lender Overlays

VA loans do not have a minimum credit score requirement. Although the agency minimum mortgage guidelines from HUD and the Veterans Administration allow borrowers with credit scores down to 500 to qualify for an FHA or VA loan, most lenders will not honor borrowers with such low scores due to their lender overlays.

Gustan Cho Associates has zero lender overlays on government and conventional loans. We have no lender overlays on FHA and VA loans. We go off the minimum agency guidelines on HUD and VA on FHA and VA loans. Over 80% of our borrowers at Gustan Cho Associates could not qualify at other mortgage companies.

Lender overlays are the main reason borrowers could not qualify at other lenders and come to Gustan Cho Associates. The bottom line is not all lenders have the same mortgage lending requirements on FHA and VA loans. Most lenders require you to meet the minimum agency guidelines but will also require higher lending standards.

Mortgage Options After Bankruptcy With Low Credit Scores

To qualify for a 3.5% down payment FHA loan, the borrower needs at least a 580 credit score. HUD, the parent of FHA, allows borrowers to qualify for an FHA loan with a minimum credit score down to a 500 FICO. Under HUD Agency Guidelines, borrowers under 580 credit scores need at least a 10% down payment. Therefore, if you have a 500 credit score and need to qualify for an FHA loan, you must put a 10% versus a 3.5% down payment on a home purchase.

VA loans do not have a minimum requirement. Gustan Cho Associates has approved countless borrowers with credit scores down to 500 FICO on VA loans. No down payment is required on VA loans, whatever the borrower’s credit score is. VA does not have a maximum debt-to-income ratio cap. As long as you get sufficient residual income and timely payments in the past 12 months, the chances are in your favor in getting an approve/eligible per automated underwriting system.

You can have prior bad credit and qualify for an FHA or VA loan. The key here is the word PRIOR. HUD and the Veterans Administration understand people can go through a difficult time. However, you must have recovered, rebuilt, and reestablished your credit. Mortgage agencies will frown upon any late payments after bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale. This also holds true for having any late payments after a period of bad credit.

How Soon After Filing Bankruptcy Can I Qualify For a Mortgage

Borrowers can qualify for FHA and VA loans with bad credit. Gustan Cho Associates does not require paying outstanding collections accounts to qualify for a mortgage. Charged-off accounts do not have to be paid. The most important factor we require is timely payments in the past 12 months.

FHA and VA loans are the only two programs allowing manual underwriting. The answer to the FAQ is What are my mortgage options after filing bankruptcy FHA and VA loans. You can qualify for an FHA or VA loan one year after filing for bankruptcy. No late payments after filing for bankruptcy.

Timely payments on all debts post Chapter 13 Bankruptcy. Again, prior bad credit is acceptable. However, timely payments in the past 12 months are key in getting an approved/eligible per AUS with lower credit scores. Manual underwriting normally requires 24 months of timely payments.

Manual Underwriting Guidelines on FHA And VA Loans

Other qualifications to qualify for an FHA or VA loan with lower credit scores or prior bad credit to get an approve/eligible per the automated underwriting system. If you cannot get an AUS Approval and get a refer/eligible per AUS, you may qualify to be eligible for a manual underwrite. Manual underwriting guidelines apply.

Gustan Cho Associates does manual underwriting on FHA and VA loans. FHA and VA manual underwriting guidelines are very similar and almost identical. In general, you need timely payments on all of your payments for the past two years to meet FHA and VA manual underwriting guidelines.

Verification of rent is generally required on all manual underwriting. You can have outstanding collections and charged-off accounts and not have to pay them off and qualify for FHA or VA loans. If you have lower credit scores and prior bad credit and must qualify for an FHA/VA Loans 500 FICO, please get in touch with us at Gustan Cho Associates.

Getting Approved For a Mortgage After Bankruptcy

Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on FHA and VA loans. Over 80% of our borrowers could not qualify at other lenders. Nobody can if Gustan Cho Associates cannot approve lower credit score borrowers. Please contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.