Last Updated on March 6, 2023 by Eric Jeanette
If you have experienced a chapter 13 bankruptcy, and are looking to get a mortgage, this guide will inform you of your potential options. It is possible to get a mortgage with a recent chapter 13 bankruptcy even before it has been discharged.
Before being eligible to get a new mortgage after a bankruptcy discharge, you will need to satisfy the waiting periods for the type of mortgage you want. The waiting periods are different for various types of mortgage programs. However, you may have an opportunity to get an FHA loan before your discharge date.
Mortgage Options After Chapter 13 Bankruptcy
The primary types of mortgages are conventional loans, FHA loans, VA loans, USDA loans, and non-prime loans. You can view the mandatory waiting periods, along with other loan requirements, for each type of mortgage below.
Conventional Loan After Chapter 13 Bankruptcy
Below are some of the basic requirements to get a conventional loan after a chapter 13 bankruptcy discharge:
- The mandatory waiting period to get a conventional loan after a chapter 13 bankruptcy is 2 years.
- Conventional loans require a borrower to have a credit score of 620 or higher.
- The minimum down payment on conventional loans is typically either 3% or 5%.
If your credit scores are below 620, we may still have an opportunity to bump your scores to get your conventional loan approval.
Would you like to see if you qualify for a conventional loan? We can match you with a mortgage lender that offers conventional loans in your location.
FHA Loan After Chapter 13 Bankruptcy
Below are some of the basic requirements to get an FHA loan after a chapter 13 bankruptcy discharge:
- The FHA will allow a borrower to get a mortgage after 12 months of verified payments during the chapter 13 bankruptcy.
- FHA loans required a borrower to have a credit score of 500 or higher.
- The minimum down payment on FHA loans is 3.5%. However, in order to be eligible for a 3.5% down payment, you must have a credit score of 580 or higher. With a credit score between 500-579, a borrower will need to put 10% down.
With on time chapter 13 bankruptcy payments, you can get approved for a mortgage before your discharge date. Would you like to learn more about the requirements to get an FHA loan?
Or, if you would like to be contacted by an FHA lender, please fill out this form.
VA Loan After Chapter 13 Bankruptcy
Below are some of the basic requirements to get a VA loan after a chapter 13 bankruptcy discharge:
- The mandatory waiting period to get a VA loan after a chapter 13 bankruptcy is 1 year.
- VA loans do not have a minimum credit score requirement. It will depend on the lender’s minimum credit score requirement, which often is around 620.
- VA loans to not require a down payment.
- In order to be eligible for a VA loan, you must be a veteran, or active duty military.
Would you like to see if you qualify for a VA loan? We can match you with a mortgage lender that offers VA loans in your location.
USDA Loan After Chapter 13 Bankruptcy
Below are some of the basic requirements to get a USDA loan after a chapter 13 bankruptcy discharge:
- The USDA will allow a borrower to get a mortgage after 12 months of verified payments. This is the same as FHA.
- The minimum credit score required to get a USDA loan is 640. Some applicants may get approved with a lower credit score (as low as 620), but it will require a manual approval.
- USDA loans do not require any down payment.
- In order for a property to be eligible for a USDA loan, the home must be located in a rural area.
Would you like to learn more about the requirements to get a USDA loan?
Non-Prime Loan After Chapter 13 Bankruptcy
Below are the requirements to get a non-prime loan after a chapter 13 bankruptcy discharge:
- Non-prime loans do not require any waiting period after a chapter 13 bankruptcy. This means that you may be able to get a new mortgage even just 1 day after a bankruptcy.
- Most non-prime lenders have a minimum FICO score requirement around 580. However, there are some non-prime lenders do not have any minimum FICO score requirement at all (which means your credit score could be below 500).
- The minimum down payment requirement depends on the lender. Some lenders offer non-prime loans with down payments as low as 10%, but it is common for the minimum down payment to be closer to 20% or higher depending upon your credit scores.
- This option is best if you cannot document your income using tax returns.
Would you like some help finding a mortgage lender? We can help match you with a lender that offers non-prime loans in your location.
Mortgage Lenders That Work With Chapter 13 Bankruptcy
Below are some of the best non-prime lenders that do not require a waiting period after a chapter 13 bankruptcy. Click to get matched with the lender that is best for your situation.
2 – People’s Bank
5 – ACC Mortgage
The lenders featured above are some of best options for a getting a mortgage post-bankruptcy. Would you like some assistance finding a lender? We can help match you with a lender that offers non-prime loans in your location.
Refinancing While in Chapter 13 Bankruptcy
One way to get out of your chapter 13 debt payments sooner is to refinance your home. With an FHA refinance, you can cash out up to 80% of the appraised value of the home and use those funds to pay off your chapter 13 debt. Speak with the bankruptcy court trustee before moving forward with this option.
You can also refinance simply to get a lower rate and lower payments. It could lighten your total monthly payments to help while you are still sending payments to the bankruptcy court.
Keep in mind the loan program available while still in chapter 13 is an FHA loan. This means you will have to include the FHA mortgage insurance premium as part of your payment. All will be factored in by a good loan officer when sharing the various options with you.
Lenders Who Will Refinance While in Chapter 13
If you are looking to refinance while in chapter 13, there are a few lenders who may be willing to refinance your mortgage. Prior to your discharge date, you can get the following refinance options:
FHA Refinance – Whether you have an existing FHA loan or not, you can refinance using a traditional FHA loan to lower your rate or improve the term of your loan. Another reason to refinance is to remove someone from the mortgage. This often occurs when there is a co-signer on the current mortgage or when you are going through a divorce.
FHA Streamline Refinance – With an FHA streamline refinance, your current mortgage needs to be an FHA loan. The benefit of this program is there are no income documents collected and your credit scores are not used for the approval. The only requirement is that you have been current on your mortgage for the past 12 years.
FHA Cash Out Refinance – If you are looking to cash out equity from your home, an FHA cash out refinance is the program that can help while still in chapter 13. The most you can refinance is up to 80% of the appraised value of your home. The guideline still require mortgage insurance even though you will have at least a 20% equity position in the home.
FHA 203k Rehab Loan – When looking to make repairs or improvements in the home, you can refinance with an FHA 203k rehab loan. You will need to hire a licensed contractor to to the work and the lender will disburse the funds to the contractor as the work is completed. You can borrower more than the home is worth with this program.
FAQ – Recent Chapter 13 Bankruptcy Mortgage
How hard is it to get a loan after Chapter 13 bankruptcy
It is not hard to get a loan after a chapter 13 bankruptcy. FHA loans have the most flexible guidelines and can be done sooner.
How long after Chapter 13 can I buy a house?
You can buy a house after you have made at least 12 on time chapter 13 bankruptcy payments. The only loan program available in this situation is an FHA loan but keep in mind most lenders will make you wait until one year after your discharge. We have the ability to do it much sooner.
How long after Chapter 13 can I get a HELOC?
You will need to wait at least 2 years after your chapter 13 discharge before a lender can provide you with a HELOC.
Can you buy a mobile home while in Chapter 13?
You can purchase a mobile home while in chapter 13 if you plan to make it your primary residence. The other requirement is that you have already made 12 on time chapter 13 bankruptcy payments. We will fit you into an FHA loan to purchase the mobile home.
What Others are Saying
Gustan Cho – “Although your mortgage application will need to be manually underwritten, you can absolutely purchase a home while in the midst of a Chapter 13 bankruptcy.”
nolo.com – “Your state could have a first-time homebuyer program to help with your down payment. With the right combination of programs, chances are you’ll be in your new house in no time.”