For a Chapter 7 bankruptcy, you’ll need to wait four years for a conventional loan and two years from an FHA loan. You’ll need to wait one year after filing Chapter 13 for an FHA loan and two years following a Chapter 13 discharge for a conventional loan.
When Can I Get a Mortgage After Bankruptcy?
Your ability to purchase a house after bankruptcy depends upon a variety of factors. Because a bankruptcy can stay on your credit report for up to ten years, lenders may be wary about offering you a mortgage.
If you have completed a Chapter 7 bankruptcy, then you’ll likely need to wait about four years after your discharge date to qualify for a conventional loan and two years for an FHA or VA loan. If you’re in the repayment phase of a Chapter 13 bankruptcy and have been steadily employed, it’s possible to qualify for an FHA or VA loan in about a year. Conventional lenders require you to wait two years following a Chapter 13 discharge, so you’ll need to complete your repayment plan prior to starting the clock for a bank loan.
Requirements for housing loans
The two primary types of mortgage loans – conventional loans and FHA loans – have different requirements. FHA loans are meant to make homebuying more accessible to those who might not meet the criteria of conventional lenders.
For example, an FHA loan requires a credit score of 500, while a conventional loan requires a 620 credit score. Along the same lines, the down payment for an FHA loan is 3.5 percent if your credit score is 580 or above, and 10 percent if your credit score is 500 to 579. A conventional lender requires a down payment of between 3 percent and 20 percent.
If you’re looking for a mortgage following bankruptcy, you’ll be required to pay mortgage insurance premiums. For an FHA loan, you’ll need to pay 1.75 percent of the loan amount at the time the loan is originated, and then pay an annual premium of between .45 percent and 1.05 percent. For a conventional loan, the mortgage insurance is .5 percent to 1 percent of the loan amount each year.
If you’re planning to purchase a home following bankruptcy, it pays to have a skilled attorney who can quickly and efficientlyguide you through the bankruptcy process. Lemberg Law has a team devoted to representing clients who pursue bankruptcy as a way to resolve their debts.
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