Can You Get a Kentucky Mortgage While in Chapter 13 Bankruptcy?
Yes — you can get a Kentucky mortgage while in an active Chapter 13 bankruptcy, but this is a narrow approval lane. Most borrowers do not qualify unless they have at least 12 months of on-time payments, court approval, and a debt-to-income ratio that still works with the bankruptcy payment included.
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Call or text 502-905-3708 for a free Kentucky mortgage review.
What Are the Requirements for a Kentucky Mortgage During Chapter 13?
1) 12 Months of On-Time Chapter 13 Payments
You generally must show at least 12 consecutive months of on-time Chapter 13 payments before applying for a mortgage. If you are only at month 10 or 11, most lenders will not move forward.
2) Court Approval Is Required
You usually need written permission from the bankruptcy court before taking on a new mortgage. Your bankruptcy attorney typically files a motion to incur debt or motion to borrow, and the court reviews whether the proposed payment fits your budget.
3) You Still Must Qualify Financially
Chapter 13 does not override standard underwriting. You still need acceptable income, employment stability, credit, assets, and debt-to-income ratios. The Chapter 13 plan payment must be counted in your total debt ratio.
Debt-to-Income Ratio Guidelines
Most manually underwritten Chapter 13 mortgage files aim for these general benchmarks:
- Housing ratio around 31% of gross monthly income
- Total debt ratio around 43% of gross monthly income
Some files can stretch higher with strong compensating factors, but if the new house payment plus your bankruptcy payment and other debts push the numbers too far, the loan usually will not work.
Credit Score Requirements
Mortgage lenders do not use the scores shown on most consumer apps. They use mortgage-specific FICO scores from Experian, Equifax, and TransUnion, then qualify you off the middle score.
- 620 and above: strongest approval range
- 580 to 619: possible, but tougher
- Below 580: usually not realistic right now
If your mortgage scores are under 620, it may make more sense to improve the file first rather than force a weak approval attempt.
Best Loan Programs for Kentucky Borrowers in Chapter 13
FHA Loans
FHA loans are the most common option for borrowers in an active Chapter 13 bankruptcy because they allow more flexible credit guidelines and manual underwriting in many cases.
- 3.5% down payment minimum
- Flexible credit compared to conventional loans
- Often the best fit for credit rebuilding buyers
Read the full Kentucky FHA loan guide
USDA Loans
USDA loans can offer 100% financing, but they are more restrictive. The property must be in an eligible rural area and household income limits apply. In practice, these files usually work best when the borrower has stronger credit.
- No down payment required
- Property must be in an eligible USDA area
- Household income limits apply
- Stronger credit usually improves odds
Read the Kentucky USDA loan guide
VA Loans
If you are an eligible veteran or active-duty borrower, a VA loan may be an option during Chapter 13. The biggest advantages are no down payment and no monthly mortgage insurance, but the file still must be manually underwritten when required.
- Zero down payment for eligible borrowers
- No monthly mortgage insurance
- Strong option for qualified veterans
Read the Kentucky VA loan guide
KHC Down Payment Assistance
Kentucky Housing Corporation programs may help eligible borrowers with down payment and closing cost assistance, depending on income, credit profile, and the first mortgage program being used.
- Can help reduce cash to close
- Often paired with FHA, VA, USDA, or conventional first mortgages
- Program terms depend on borrower eligibility and current offerings
Read the Kentucky KHC mortgage guide
Why Most Chapter 13 Mortgage Files Get Denied
- Applying before 12 full months of Chapter 13 payments are complete
- Late bankruptcy plan payments
- Using consumer credit scores instead of mortgage scores
- Forgetting to include the Chapter 13 payment in debt-to-income calculations
- Trying to get zero down financing with weak credit and no reserves
- Not getting court approval before moving forward
How to Improve Your Approval Odds
- Make every Chapter 13 payment on time
- Keep credit card balances low
- Avoid overdrafts and negative bank balances
- Do not open new credit accounts
- Build savings for down payment, closing costs, and reserves
- Talk with a mortgage broker before house hunting
Internal Link Silo: Related Kentucky Mortgage Guides
FHA Loan Resources
Learn down payment rules, credit score requirements, mortgage insurance, and FHA eligibility in Kentucky.
USDA Rural Housing Resources
See how zero-down USDA financing works in eligible Kentucky rural and suburban areas.
VA Loan Resources
Review eligibility, no-down-payment advantages, and VA-specific financing rules for Kentucky veterans.
KHC Down Payment Assistance
See how Kentucky Housing Corporation programs may help with down payment and closing costs.
Credit Repair and Mortgage Scores
Understand how mortgage credit scores work and what steps may improve your approval chances.
Frequently Asked Questions
Can I get a mortgage before 12 months in Chapter 13?
No. In most cases, you need 12 full months of on-time Chapter 13 payments before applying.
Do I need court approval to buy a house during Chapter 13?
Yes. Most borrowers need written permission from the bankruptcy court before taking on a new mortgage.
What loan is usually best during Chapter 13 bankruptcy?
FHA is usually the most common and practical option, although USDA and VA may also work depending on eligibility.
Can I get a zero down mortgage while in Chapter 13?
Possibly. USDA and VA may allow zero down for eligible borrowers, but these files still must meet stricter underwriting requirements.
Do lenders use Credit Karma scores?
No. Mortgage lenders use mortgage-specific FICO scores and qualify you based on the middle score.
Get a Free Kentucky Mortgage Review
Want to know whether you can qualify while in Chapter 13 bankruptcy?
Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA
NMLS #57916 | Company NMLS #1738461
Equal Housing Lender
This is not a commitment to lend. All loans are subject to credit approval and program requirements.
This website is not affiliated with or endorsed by FHA, VA, USDA, KHC, or any government agency.
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Kentucky FHA Mortgage Lender 
Reblogged this on Kentucky USDA Rural Housing Mortgage Loans and commented:
Here is a brief summary on getting a mortgage loan while in a Chapter 13 Bankruptcy:
You must have 12 payments paid into the Chapter 13 before you can apply for a mortgage loan.
The payments must be made on time for last 12 months or after 12 months if you have been in longer, so no late payments to the Chapter 13 while in it.
You have to ask permission from the courts to seek a mortgage loan. They usually grants this. I have never not seen them grant it.
You have to qualify with the new house payment along with Chapter 13 payments and other debts listed on credit report. Debt to income ratios usually center around 31 and 43% respectively, meaning the new house payment should not be more than 31% of your gross monthly income and your total house payment and debts listed on credit report along with Chapter 13 payment should not be more than 43% of your total gross monthly income.
Credit scores: Most FHA lenders I work with will want a 620 middle score. You have three fico scores from Experian, Equifax, and Transunion, and they throw out the high and low score and take middle score. For example, if you had a 598, 679, and 590 scores respectively for all three bureaus listed above, your qualifying score would be 598.
There are some FHA investors that I am set up with that will go down to 580, but I have seen in my past experiences 620 will get you a better deal and far greater chance of closing on your loan with FHA.
Down payment: For FHA loans, you will need to have at least 3.5% down payment saved up. It is extremely hard to find a no money down loan program to get you approved for a mortgage while you are in a Chapter 13 plan.
FHA and USDA are really the only two options that I know of that offer financing for a borrower with a current Chapter 13 Bankruptcy plan plan, so keep that in mind.
Conventional loan program offered by Fannie Mae will not allow a mortgage loan for someone in a Chapter 13 Bankruptcy plan.
On USDA loans, it is possible to get 100% Financing after you have paid into the plan for 12 months with a good pay history. The credit scores needed for a USDA loan approval really need to be above 640 in my past experience in getting them approved. A lot of USDA lenders will say they will do down to 620, but it is very difficult getting them approved. Best to get your scores up to increase your changes in qualifying for a USDA loan. There is not much that difference in getting your scores up to that range if you are at a 620 score now.
With USDA loans, they have income and property eligibility requirements that FHA does not have, so below is a rough run down of FHA vs USDA loan for you:
Typically, USDA-eligible properties are located in rural areas. It is a mistake, however, to think that you have to live far out in the country to qualify for a USDA loan. USDA-eligible properties are often located near urban areas.
A property’s eligibility is determined by its location with respect to USDA’s map of eligible locations. The USDA program also places limits on your household income based on median earnings in an area. If you exceed that limit, you can’t obtain a USDA loan.
The FHA, by contrast, does not place limits on household earnings. The FHA, however, does establish a maximum limit on the amount of money that can be borrowed through the program.
So if you were in a hurry to buy, after you have been in your Chapter 13 plan for 12 months, I can look at getting you approved to buy a home if you wish:
In order to get you pre-approved for your max loan amount, I will need the following items from you. This is a free process and I will give you a copy of your credit report for free!
Mortgage Pre-Approval Checklist
1. Last 30 days worth of pay stubs
2. Last 2 years W-2′s
3. Last 2 years tax returns
4. Last two months bank statements for all accounts including 401 k or retirement account if you have one
____________________________________________
Once I get the information above, I can usually get you pre-approved in one day, and get your loan closed in 30-45 days after you get an accepted offer on a home.
Your first house payment usually starts 30-60 days after you close.
Your loan pre-approval is usually good for 90 days.
I don’t need originals, copies are fine. You can fax or email me the above documents, or meet me face-to-face if you wish to make copies and go over your options.
Let me know your questions.
Thanks and look forward to helping you.
Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
click here for directions to our office
Text/call: 502-905-3708
fax: 502-327-9119
email:kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/
If you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.
Joel Lobb
Senior Loan Officer
(NMLS#57916)
Text or call phone: (502) 905-3708
email me at kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the views of my employer. Not all products or services mentioned on this site may fit all people
This web site is not the FHA, VA, USDA, HUD or any other government organization responsible for managing, insuring, regulating or issuing residential mortgage loans.
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All approvals and rates are not guaranteed, and are only issued based on standard mortgage qualifying guidelines
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