Bankruptcy and VA Guidelines for Kentucky Mortgage Loan Approval

bankruptcy and mortgage loan approval

How soon can you qualify for a Kentucky VA loan after a Chapter 7 or 13 Bankruptcy?

How Soon Can You Qualify for a VA Loan after a Chapter 7 or Chapter 13 Bankruptcy in Kentucky?

How soon can you qualify for a VA loan after a bankruptcy in Florida? — **Kentucky VA mortgage guide for bankruptcy**

As a reminder, these are the basic differences between bankruptcies which impact VA qualifying differently:

Chapter 7 Bankruptcy: you ask the bankruptcy court to discharge most of the debt you owe
Chapter 13 Bankruptcy: you file a repayment plan with the bankruptcy court to pay back all or a portion of your debts over time.

So, does the type of bankruptcy filed affect VA loan qualifying? The answer is YES, it most definitely does.

How soon can you qualify for a VA loan after a Chapter 7 Bankruptcy?

Chapter 7 Bankruptcies discharged more than two years ago from the date of closing for purchases and refinance, it may be disregarded.
If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that the applicant or spouse is a satisfactory credit risk unless both of the following requirements are met:

The applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period; and
The bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified. Divorce is not generally viewed as beyond the control of the borrower and/or spouse.

How Soon Can You Qualify for a VA Loan after a Chapter 7 or Chapter 13 Bankruptcy in Florida, Texas, Tennessee, or Alabama?

Please note that additional factors can contribute towards granting an exception to the 2 year policy, but any and all factors considered would have to be reviewed on a case by case scenario prior to approval. Borrowers discharged for less than a year will not generally be accepted as a satisfactory credit risk.

How soon can you qualify for a VA loan after a Chapter 13 Bankruptcy?

A. For Chapter 13 Bankruptcies that are still in progress:

The applicant must document at least one year into the payout plan has elapsed along with satisfactory payment history
The applicant must obtain court permission to enter into the new mortgage
When the bankruptcy is still in repayment, the Chapter 13 payment will be counted in the debt ratios

B. Once the borrower has satisfactorily completed the repayment, the borrower is considered to have re-established credit

As you can see, the type of bankruptcy can drastically impact VA loan eligibility and the required waiting period.

If you have filed for chapter 7 or chapter 13 bankruptcy, then you can still qualify for a mortgage just one day out of bankruptcy. Today, there are thousands of people who are trying to find a mortgage after filing for bankruptcy. In the past, finding a mortgage after a bankruptcy was not the easiest thing to do. The good news is that today you can get a mortgage just one day out of bankruptcy.

How Long after a Bankruptcy Can I Qualify for a Mortgage?

There are bankruptcy lenders who can help with your mortgage even just one day out of chapter 7 or chapter 13 bankruptcy. You will likely need a larger down payment and show that you are taking steps to improve your credit.

Below, we will take you through some mortgage after bankruptcy options and then connect you with some of the best bankruptcy lenders. We understand that you area dealing with a lot and having a bankruptcy is not easy. Let us help guide you through this process.

Type of Loan	Chapter 7	Chapter 13
Conventional	4 years	2 years
FHA	2 years	1 year
VA	2 years	1 year
USDA	3 years	1 year
Subprime	1 day	1 day

How Long Must You Wait To Qualify for a Mortgage After Filing for Bankruptcy

Every type of loan has different waiting period requirements. Here are some of the basics:

Mortgage Waiting Period After Bankruptcy Discharge

FHA Loan Requirements After a Bankruptcy

VA Loan Requirements After a Bankruptcy

You will have a two year waiting period first after filing for bankruptcy
You will need to meet the eligibility criteria as a veteran
Zero down payment
No PMI required for a VA loan
You must meet the minimum income requirements
You will have to pay the VA funding fee which can also be borrowed.

USDA Loan Requirements After a Bankruptcy

You will have to wait three years after filing for bankruptcy
Must be a citizen of the US or be an eligible non-citizen
Must be legally able to borrow (ie, must meet the age limits)
Must occupy the home as your primary residence
Must currently be without safe and sanitary housing now
Must not have the current ability to obtain a conventional loan from other sources and lenders
May not be barred from participating in any federal loan programs.
Must meet the income limits set by the program

Kentucky VA Home Loans for 2021

No down payment in most cases for purchase loans (up-front money toward your home purchase), and easier borrower credit requirements.

No monthly mortgage insurance premiums or private mortgage insurance (PMI).

Lower homebuyer closing costs, and limits to what borrowers can be charged.

The opportunity to roll your “VA funding fee” into your mortgage.

The ability to refinance a non-VA loan into the VA mortgage program.

The opportunity to: ask a home seller to contribute up to 4 percent of the mortgage amount to cover some of the closing costs; ask your lender to cover some of the closing costs; seek closing cost assistance through state homebuying programs created for veterans and first-time buyers.

The right to become a VA borrower for life. In most cases you can use VA mortgage programs forever, and sometimes you can have more than one VA loan.

Eligibility of financing for spouses of service-members who died in the line of duty or from a service-related disability.

You can review all types of Kentucky VA Home Loans here, including purchase mortgages, refinance mortgages (called Interest Rate Reduction Refinance Loans or IRRRLs), and cash-out refinance loans.

To qualify for a Kentucky VA Home Loan, usually a military veteran or service-member must have 90 consecutive days of active service during wartime, or 181 straight days of service during peacetime, or six years in the national guard or reserves of a particular military branch. You can find out if you’re eligible here.

Kentucky VA mortgage comes with an additional closing cost called a “VA funding fee” of between 1.4 to 3.6 percent on the amount borrowed (depending on your circumstance). This special fee that non-VA borrowers never have to pay helps partially fund the “government backed” part of the VA borrower program, and many VA borrowers can roll it into their mortgage.

VA Loan Quick Facts

0% Down

Minimum Down Payment

620 Credit

Minimum Credit Score

41% DTI

Max Debt-to-Income Ratio

What is a VA Loan?

VA Loans are designed to assist veterans purchase a home. Active duty military and veterans across the nation will enjoy the desirable loan terms and low interest rates that often come with a VA loan. Additional benefits like no down payment requirement help make home buying an affordable and cost-effective reality for those who have served and continue to serve our country.

What are the benefits of a VA Loan?

VA Loan benefits and features:

Zero down payment
Buyers may finance the funding fee into the loan
Closing costs may be covered
Buyers may use gifts and seller contributions to cover closing costs

Who may benefit from a VA Loan?

A VA Loan may the right fit for you if:

You’re an eligible veteran or active-duty military
You’re buying a first home or are a repeat homebuyer

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Kentucky VA Mortgage Guidelines for 2021

VA Loan Limits in Kentucky for 2020

How can I get a VA Mortgage loan in Kentucky in 2021?

Kentucky veterans and active duty service members are eligible. However, all veterans, active duty service members and National Guard members must meet certain requirements.

see below requirements for Kentucky VA Mortgage Loans:

Served 90 consecutive days during wartime
Served 181 days during peacetime
Have more than six years of service with the National Guard or Reserves

Also, Kentucky VA loans are available to the surviving spouses of military members who died in the line of duty.

How does a Kentucky VA Home Mortgage Loan Work?

The Veterans Administration guarantees the loan, but they do not make it.. VA sets forth the guidelines as far as credit, income, assets, property requirements and inspections, but the lenders use this to make a lending decision. Usually the credit, income and assets, i.e. bank statements, pay stubs and tax returns, along with credit report and credit score to get a pre-approval upfront. The appraisal report is done by VA assigned appraiser in the area and neither the lender, borrower, realtors, sellers, have no control as far as choosing the Kentucky VA appraiser. VA will typically give the VA approved appraiser 10 days to make contact, and usually get the appraisal report back within 7-10 days after inspections.

How much can I borrow with a Kentucky Mortgage VA loan?

There is no max income limit for VA loans beginning in 2021.

VA Loan Limits in Kentucky for 2021

VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down-payment. These loan limits vary by county, since the value of a house depends in part on its location.

The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to 4 times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price.

VA county loan limit:

VA’s 2021 Loan Limits are the same as the Federal Housing Finance Agency’s limits – 2021 Loan Limits (Effective January 1, 2020).

For all non-IRRRL VA loans, effective with loans closed on or after January 1, 2021, we are aligning with FHFA’s increase to the county loan limits. VA does not have a maximum loan amount, but instead uses the county loan limit to determine the maximum potential entitlement available for veterans with used or compromised entitlements.

Complete details of Kentucky VA’s county loan limits can be found at
https://www.va.gov/housing-assistance/home-loans/loan-limits/.

As a reminder, we require that all Kentucky VA loans conform to GNMA secondary market guidelines which include the minimum 25% coverage requirement.

What is the credit score or fico score required for a Kentucky VA Mortgage loan?

VA has issued guidelines that calls for no minimum credit score. However, most VA Kentucky lenders will want to see a credit score of at least 620 before approving the mortgage. There are two lenders we work with currently that will do down to a 500 credit score, but it is very difficult to get them approved . The best thing to do is let someone pull your credit and see where you are at and go from there. A lot of lenders you will see will want a 620 credit score, with a few going down to 580. Again, this will vary greatly from lender to lender and be based upon our automated underwriting findings (AUS) from Desktop Underwriting.

Do VA Loans Require a Down payment.

Kentucky VA home buyers do not require a down payment. It does not matter if you have a 500 credit score or 780 credit score, all VA loans offer a no down payment option to applicants. The only reason you would need a down payment is if you had to qualify for the home loan payment, or if you were borrowing with a co-applicant, that is not married to the borrower. For example, if a veteran is legally married, and his wife is not a veteran, that is fine with VA and you would not need a down payment, However, let’s say the borrower and his friend or girlfriend wanted to buy a house together, and we needed the co-borrowers income and credit to make it work, then you would need to put down 12% on the home loan since the borrower and co-borrower are not legally married.

Mortgage insurance on A VA loan?

One of the great benefits of VA loans is that have no monthly mortgage insurance premium. When you compare this to FHA, USDA mortgage loans in Kentucky, you would need to pay monthly mortgage insurance.

There is an upfront funding fee from VA , but if you are disabled, you can get this waived sometimes. See chart below

Kentucky VA Funding Fee Information

In order for VA to guarantee the home loan, there is a closing cost assessed by the VA to originate the loan called a funding fee. This fee will vary, depending upon the type of Kentucky VA loan, whether this is your first time to use your entitlement, if you are a disabled veteran, the down payment and if you served active duty or in the National Guard/Reserves.

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How long does it take to close a VA Mortgage loan in Kentucky?

There’s no set-in-stone time limit for how long the Kentucky VA loan process takes, but on average, you should be able to get it done within 30 days depending on the appraisal report and home inspections

VA mortgage loans is the only Government sponsored mortgage that requires a termite inspection., so keep that in mind on your inspections when you are having them done after the accepted contract.

Can I only use a VA loan once in Kentucky?

This is a common myth with many VA eligible home buyers and homeowners. If you’re eligible for the VA loan, then you’re eligible for your entire life. Plenty of home buyers end up using the VA loan more than once, mostly because it’s arguably the best loan program out there.

Can I get a Kentucky VA Mortgage loan with a previous Bankruptcy or Foreclosure?

Bankruptcy Chapter 13

If the applicant has finished making all payments satisfactorily, the lender may conclude that the applicant has reestablished satisfactory credit
If the applicant is still in the repayment period, as long as 12 months’ worth of satisfactory payments have been made and the trustee or Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.

Bankruptcy Chapter 7

2 years from discharge date
Manual underwrites allowed
If the bankruptcy was discharged within 1 to 2 years, it is probably not possible to determine that the applicant is a satisfactory credit risk unless both of the following requirements are met

The applicant has obtained credit subsequent to the bankruptcy and has made satisfactory payments over a continued period of time, and
The bankruptcy was caused by circumstances beyond the control of the applicant such as unemployment, prolonged strikes, medical bills not covered by insurance and the circumstances are verified. Divorce is not viewed as a circumstance beyond the applicants control

Joel Lobb (NMLS#57916)
Senior Loan Officer

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

Text/call 502-905-3708
kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

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