Chapter 13 rules are tricky Kimberly. With Conventional loans it is pretty cut and dry. In most cases it's 4 years, but with extenuating circumstances it can be as little as 2 years.
If you are still IN chapter 13, FHA guidelines may permit you to obtain a new loan if the following apply:
- one year of the pay-out period under the bankruptcy has elapsed
Â· the borrowerâ€™s payment performance has been satisfactory and all required
payments have been made on time, and
Â· the borrower has received written permission from bankruptcy court to enter
into the mortgage transaction.
If the BK has been discharged and 2 years have elapsed then it will be much easier to get approved, provided you have re-established good credit with no lates since. Technically, the guidelines allow you to apply 1 year out of discharge, but they say your application must be downgraded to a REFER and be manually reviewed by a Direct Endorsement (DE) underwriter. This means there will be additional restrictions placed on you, with regards to debt ratios and such. In addition, some lenders might not even touch that deal or they may place additional lender overlays in place.
In either case, I would speak to a lender soon. Even if you need to wait until the 2 year mark, it doesn't hurt to check things out 6 months ahead to see if there is anything you need to work on to get yourself in shape before then.
Feel free to call me if you would like assistance.
Tony Grech | Mortgage Loan Originator | NMLS 977416
PMAC Lending Services, Inc.
Toll-free (855) 642-4762 | Fax (248) 945-4842 | Direct (248) 728-0078
Down payment for FHA is 3.5% and closing costs should be around 3% of purchase price. You indicated this is an FHA203K loan, perhaps that is the reason for additional fees, but it still seems high to me. Speak with your agent in regards to the extension, as I am not representing you. I do know that as long as you close on time, the seller "the bank" does not care where the loan comes from....all they care about is closing on time. Keep in mind there is most likely a per diem of $50-$100 a day charged by the seller if you do not close on time. Best of Luck to you!... more