FHA during Chapter 13 repayment: what is required

A different kind of bankruptcy, a different test

Chapter 7 liquidates and ends; Chapter 13 sets up a repayment plan. FHA treats them differently because a Chapter 13 borrower may still be in the middle of the plan when they want to buy. The Handbook's approach is to ask whether you have shown a year of good behaviour inside the plan, and whether the court is willing for you to take on new debt.

The three conditions

1. Time inside the plan. At the time of case number assignment, at least 12 months of the payout period under the bankruptcy must have elapsed.
2. Payment performance. During the most recent 12 months, the lender must determine that your payment performance has been satisfactory and all required payments have been made on time.
3. Court permission. You must have received written permission from the bankruptcy court to enter into the mortgage transaction.

All three must hold. A borrower 14 months into a plan who missed a payment four months ago fails the second. A borrower 18 months in with perfect payments but no court letter fails the third. The calculator adds 12 months to your first plan payment date and reports which conditions are still missing. The Handbook speaks of the "payout period"; the exact starting point is a matter for your plan documents and the lender, so treat the date you enter as your best estimate.

Getting the court's permission

The Handbook requires the permission to be written. In practice that usually means your attorney asks the bankruptcy court or the trustee, and a letter or order is placed in the lender's file. Because the court can say no, or take weeks, start this step before you are under contract. This page cannot tell you how your court or trustee handles requests; your bankruptcy attorney can.

Chapter 13 discharge and automated underwriting

If you complete the plan and receive a discharge, the TOTAL rule applies: the lender must document the passage of two years since the discharge date of any bankruptcy, and a discharge within two years of the case number date means a downgrade to Refer and manual underwriting. The manual underwriting rule above then governs. So a borrower who has just completed a plan faces a manual review for two years after the discharge, while one still inside a plan with 12 months of clean history is judged on the three conditions above.

Documents and proof

If the credit report does not verify the discharge date or the lender needs more to see which liabilities were discharged, it must obtain the bankruptcy and discharge documents. The lender must also document that your current situation indicates that the events that led to the bankruptcy are not likely to recur. Your plan payments are part of your debts: the monthly amount counts in the debt-to-income ratio, so use the DTI calculator to see how a plan payment affects what you can borrow.

A close cousin: credit counseling plans

The Handbook gives a parallel rule for borrowers in a consumer credit counseling program. It does not disqualify a borrower if the lender documents that one year of the payout period has elapsed, payments have been satisfactory and on time, and the borrower has written permission from the counseling agency to take on the mortgage. Under automated underwriting, participation in credit counseling does not require a downgrade or any explanation.

Where to go next

If your case is a Chapter 7, read the Chapter 7 page. For score requirements see the minimum score page, since a plan period often leaves a lower score.

Sources

• HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, Update 18 PDF: Manual Underwriting of the Borrower, Bankruptcy (Manual), Standard: Chapter 13, Handbook p. 293; Credit Counseling/Payment Plan, p. 295; Underwriting the Borrower Using the TOTAL Mortgage Scorecard, Bankruptcy (TOTAL), p. 208. Read November 2, 2026.
• HUD, Single Family Housing Policy Handbook 4000.1 information page. Read November 2, 2026.

Text read: HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, the clean Update 18 PDF that HUD links from its Handbook 4000.1 information page (HUD lists it as the August 12, 2026 update). Confirm current requirements with an FHA-approved lender, who may apply stricter standards of its own. This page paraphrases the Handbook and does not replace it. Page numbers cited are the Handbook's own and may be approximate; use the section headings to locate the text.