What You Need To Know About How Bankruptcy Affects Your Home Loan

Bankruptcy Garland TXIf you’re considering filing for bankruptcy, you probably have a lot of questions about what your financial or credit situation will look like once your current bills are discharged.  One of the most important questions people who declare bankruptcy have is, “Will I ever be able to get a home loan?”  The answer to that question is, “Yes,” with some conditions.  Most common types of home loans, like conventional, FHA and VA, require some type of waiting period after bankruptcy has been discharged.  Here’s what you need to know about how both types of personal bankruptcy will affect your ability to purchase a home with one of these types of loans:

Getting a Home Loan After Chapter 7 Bankruptcy

  • Conventional Home Loans – In the past, post-bankruptcy, conventional home loans used to have the longest waiting periods; but that is no longer the case.  If you want to apply for a conventional home loan after Chapter 7 bankruptcy, you’ll be eligible to apply two years after your bankruptcy was discharged, if the bankruptcy was caused by circumstances beyond your control.  The waiting period is four years if it was caused by simple financial mismanagement.
  • FHA Home Loans – Borrowers must wait at least two years after discharge to apply for an FHA home loan and during this time, they must either reestablish their credit or choose to incur no new credit debt.  The borrower may apply for a loan between one and two years after discharge if they can prove that the bankruptcy was caused by circumstances beyond their control and they have exhibited an ability to handle their finances responsibly.
  • VA Home Loans – As with FHA loans, borrowers eligible for VA home loans must wait two years after bankruptcy discharge to apply for a loan.  They may be allowed to apply between one and two years after discharge if the bankruptcy was caused by circumstances beyond their control and they have worked to reestablish their credit.  

Getting a Home Loan After Chapter 13 Bankruptcy

  • Conventional Home Loans – Borrowers who have filed for Chapter 13 bankruptcy must wait two years after discharge or four years after the dismissal of their case. If a borrower has filed for bankruptcy more than once in the preceding seven years, they must wait five years before applying.
  • FHA Home Loans – Chapter 13 bankruptcies involve three- to five-year payment plans. Borrowers may be eligible to apply for a home loan one year after filing for bankruptcy if all of their payments have been made on time during that period and they receive permission from bankruptcy court to enter into a mortgage loan.
  • VA Home Loans – Chapter 13 bankruptcy and home loan guidelines for the VA mirror those of the FHA.  Borrowers must have made payments for at least a year and they must get written approval for the loan from the court trustee.
Bankruptcies are complicated, as are the rules for applying for home loans after bankruptcies.  To get more detailed information and help with any type of personal bankruptcy, call Collins & Arnove in Garland, TX, at (972) 516-4255.  You can also visit www.ntb.wpmudev.host to discuss your bankruptcy.

Collins & Arnove | Bankruptcy Garland TX | 972-516-4255