FHA Loan After Bankruptcy – Step-by-Step
It may seem a far off dream, but it is still a possibility. You may qualify to buy a home with an FHA loan after bankruptcy. The requirements are strict after a discharged bankruptcy, but it is possible. Here’s what you need to know.
Wait 2 Years (Chapter 7)
After your Chapter 7 bankruptcy discharges you are released from any further obligation to unsecured debts. So, 2 years after discharge you can consider an application. Note that it is not the date it was filed, but your discharge date that’s important. You will also be asked to show you can handle your financial affairs.
Maybe Only 1 Year
If you can prove your bankruptcy was initiated by an event beyond your control, you only need to wait 1 year to apply. This could be something like losing a job, disease or injury, or a reduction in your household income. A loss of 20% of your income over 6 months is considered a significant financial event. You do need good credit before and afterwards, too.
Chapter 13 Payments for 1 Year
Chapter 13 bankruptcies create a 3 to 5 year plan for repayment of debts. After that time the rest is discharged. Make your payments as scheduled for 1 year, and you can apply for an FHA loan after bankruptcy. You’ll need a note from your trustee to confirm how much you should borrow. And you’ll need to show you can make the mortgage payments.
Repay any Taxes
If you have any tax liens with the IRS, you need that cleared up before you can apply for an FHA loan after bankruptcy. You can pay the balance, or arrange payments at the IRS.
3 Years Since a Foreclosure
After a foreclosure, wait 3 years to apply, no matter if you had an actual foreclosure or a deed in lieu of foreclosure.
Pay All Judgments
Make sure all payments are made, or otherwise handled before you can qualify for the FHA loan after bankruptcy.
These FHA loans give you a boost to afford a home even after financially difficult times. At Good to Go Mortgage we can help you find the right mortgage provider to help you get your FHA loan after bankruptcy.