Buying a Home During Chapter 13 Bankruptcy Is Possible

Securing a mortgage while in an active Chapter 13 bankruptcy is possible, primarily through government-backed loan programs. This overview summarizes the key requirements and considerations based on the article.

• Feasibility: Contrary to common myths, you can obtain a mortgage while in a Chapter 13 repayment plan. The process is structured and requires meeting specific criteria.
• Primary Loan Options: The most accessible loan types are government-backed, such as FHA and VA loans, which have explicit guidelines for borrowers in bankruptcy. Conventional loans are generally not available during an active plan.
• Mandatory Payment History: Applicants must demonstrate a solid track record by making at least 12 consecutive, on-time payments to their bankruptcy trustee. This is a strict requirement.
• Legal Approval: You must obtain formal written permission from both the bankruptcy court and your trustee. This involves filing a Motion to Incur Debt, where the court assesses if the new mortgage payment is manageable alongside your existing plan.
• Financial Qualification: Your monthly Chapter 13 plan payment is counted as a debt in your debt-to-income (DTI) ratio calculation, which can impact your borrowing capacity.

Read the full blog article here: https://www.iqratemortgages.com/blog/mortgage-during-chapter-13-in-houston-texas-a-guide