Bankruptcy 2019

Bankruptcy 2019 - In fact, even if you have had credit problems, such as a Chapter 7, it's easier for you to qualify for an FHA loan. FHA allows you to refinance or purchase a house after Chapter 7.

Chapter 7

At least two years must have elapsed since the discharge date of the borrower and / or spouse's Chapter 7, according to FHA guidelines. This is not to be confused with the 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.

Minimum Credit Score

FHA announced a policy change to address risk and strengthen finances. FHA changed the minimum credit scores for new borrowers:

• New borrowers will now be required to have a minimum credit score of 580 to qualify for FHA's 3.5% down payment program
• New borrowers with less than a 580 credit score will be required to put down at least 10%
• This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well
• This change were posted in the Federal Register in February 2010 and after a notice and comment period, went into effect in 2010

Borrowers with a prior bankruptcy, foreclosure, deed-in-lieu, or short sale may be eligible for an FHA insured loan if the bankruptcy, foreclosure, deed-in-lieu, short sale was the result of a documented extenuating circumstance.

Borrowers may also be eligible for an FHA insured loan on a purchase transaction after 12 months from the completion, discharge, trustee's sale if the borrower meets the requirements for extenuating circumstances Economic Event. 

A few key items for borrowers applying under the enhanced guidelines:

• Purchase transactions only
• The borrower must complete Housing Counseling no more than thirty (30) days prior to application. The counseling cannot be completed after application.
• The borrower must use on of HUDs approved Housing Counseling Agencies. FHA will require a copy of the certification of counseling completion and a copy of the disclosures provided by the Housing Counseling Agency.  

To be eligible for these enhancements, borrowers must have experienced a minimum of 20% reduction to the household income for duration of at least six (6) months. Written VOE’s from previous employers and tax returns will be required for all household members; this can require verifying prior income and employment for individuals not on the new transaction.

Household income is defined as all parties on the prior Note/Deed of foreclosed property even if they are not on the new transaction. If there was no prior mortgage/foreclosure, then the guidelines are applied to the borrowers of the current loan. Borrowers must have a satisfactory credit history prior to the Economic Event. Borrowers with habitual late pays, disregard for credit, mismanagement are not eligible for these enhancements.  

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FHA Bankruptcy 2019 Florida and New Jersey