Although bankruptcy can make it easier to afford a home, getting approved for financing can be more difficult. However, you might be able to qualify for a mortgage loan sooner than you initially thought. You aren’t prohibited by any laws from buying a home after filing for bankruptcy. It should be noted that most lenders are not going to be handing you money right away. Private lenders tend to have strict guidelines regarding loan applicants who have previously filed for bankruptcy.
FHA Loans
At the time of this writing, the Federal Housing Administration (FHA) will consider your loan application 2 years after you filed for bankruptcy. However, lenders may require additional waiting periods in excess of the FHA requirements. It is important to note that the required waiting period begins from the time the bankruptcy is discharged - NOT when the bankruptcy is filed. To qualify, you will need to establish a positive credit history that has no major credit blemishes on it. Having no credit history won’t necessarily disqualify you from approval, especially if you can show your bankruptcy was out of your control. You will also have to show documents that show you are capable of maintaining payments on your new mortgage.
The required waiting periods in a Chapter 13 bankruptcy can be much less. As the process can be extremely complicated, it is important to speak with an experienced attorney to discuss your options.
VA Loans
Like an FHA loan, VA loans require a 2 year waiting period following your Chapter 7 bankruptcy. The waiting period can be as little as 12 months if you filed a Chapter 13 bankruptcy. This makes these loans particularly attractive to military veterans. Most lenders who participate in the VA lending program will require a minimum credit score. It’s important that you keep your credit score clean during the 2 year waiting period.
Although the VA has exceptions to the 2 year waiting period after filing a Chapter 7 bankruptcy, it is important to remember that the VA-approved lenders are the ones that actually issue the VA loan. Many of these approved lenders have standards that rise above the VA requirements and waiting periods.
Bankruptcy can be reported on your credit for 10 years. However, different chapters of bankruptcy have various exceptions. You should speak with a lawyer to find out if you qualify for any loan exceptions.
Do you have more questions or concerns about purchasing a home after filing for bankruptcy? Call (321) 320-6088, or contact our Brevard County bankruptcy attorneys to learn how we can help you today.