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Chapter 13 bankruptcy issues can be tricky, depending on what the borrower has done in the wake of the bankruptcy filing, FICO scores, and whether or not the court will grant permission for the borrower to apply for a new home loan.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

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FHA Loan Questions: Will The Government Grant My Loan?

March 10, 2015 - Here’s a variation on a common question we often receive about FHA home loans:

"I have paid off my Chapter 13 BK just recently. As part of that I did short sales on 3 properties back in 2010 & 2011. My credit score is at 690 at this point and we are in good financial shape. We have $90,000 in our savings account, $380,000 in liquid assets like 401K, owned property, etc. Our monthly income is over $6000, Will the government or anyone grant us a mortgage?”

Chapter 13 bankruptcy issues can be tricky, depending on what the borrower has done in the wake of the bankruptcy filing, FICO scores, and whether or not the court will grant permission for the borrower to apply for a new home loan.

What’s crucial in the wake of any bankruptcy filing in order to qualify for a new FHA loan? Building a new, reliable pattern of loan repayment and improving credit scores.
This question implies something that should be put to rest once and for all; that the FHA and/or the government are not responsible for issuing loans or credit. That’s not how the FHA loan program works.

A participating FHA lender would handle that part of the transaction including the negotiation of interest rates, term of the loan, associated fees and expenses, etc. The government guarantees a portion of the loan amount, making the transaction less of a financial risk for the lender issuing the credit; the government won’t lend money or deal with the borrower in that way. That would be the lender’s job.

The FHA can and does review FHA home loan applications sent to it by the lender to see if those applicants meet minimum standards. The FHA may review a loan application that seems “marginal” or where the underwriter isn’t certain the applicant meets program standards. The FHA may also review a loan application where an exception to policy is requested.

These situations, while not common, do require the FHA to take part in the loan approval process, but the FHA does not issue credit or send/lend money on the borrower’s behalf in order to purchase property.

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FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!