Getting A Mortgage After Bankruptcy: What To Know
There are many myths and misconceptions concerning consumer bankruptcy, especially when it comes to the impact of a Chapter 7 bankruptcy or Chapter 13 bankruptcy on your credit and your ability to rebuild your financial profile once your debts are discharged. Indeed, many consumers incorrectly assume that a personal bankruptcy filing means that they will be ineligible for various types of credit for years to come, and that it will be nearly impossible to ever get a mortgage again in order to buy a home. It is critical to understand that filing for bankruptcy does not mean that you will lose your ability to obtain credit or to buy a house. In fact, it is often much easier to begin rebuilding credit after a bankruptcy discharge than most people think.
Our West Palm Beach bankruptcy lawyers want to provide you with more information about buying a house after bankruptcy, including information about waiting periods based on the type of bankruptcy you have filed for and the type of mortgage you are seeking.
Obtaining a Mortgage After a Chapter 7 Bankruptcy
If you have filed for Chapter 7 bankruptcy and received a discharge of eligible debts, you may be wondering when you can apply for a mortgage and buy a home, especially if you have been working to rebuild your credit. While your credit will be affected by your bankruptcy case, you can often begin rebuilding your credit immediately after your bankruptcy discharge. You might do that by obtaining a secured credit card, using it regularly, and immediately paying off what you owe, for example. Once you have rebuilt your credit to the point that you believe you could be eligible for a mortgage, do you need to take any other considerations into account?
Mortgages typically have waiting periods following a Chapter 7 bankruptcy discharge. As Rocket Mortgage explains, the amount of time you will need to wait to qualify for a conventional loan is four years from the date of your bankruptcy discharge. However, if you want to seek a mortgage through a government-backed loan, such as through the Federal Housing Administration (FHA) or the U.S. Department of Agriculture (USDA), the waiting period is shorter. For a USDA loan, the waiting period is three years. For an FHA loan or a loan through the U.S. Department of Veterans Affairs (VA), the waiting period is just two years from the date of your bankruptcy discharge.
Getting a Mortgage After Chapter 13 Bankruptcy
Getting a mortgage after a Chapter 13 bankruptcy is somewhat similar to obtaining a mortgage after a Chapter 7 bankruptcy case, but the waiting period is often even shorter. For a conventional home loan, you will typically need to wait four years from the date you filed for Chapter 13 bankruptcy, or two years from the date of your discharge or dismissal. The waiting periods are shorter for government-backed loans. For a USDA loan, the waiting period is just one year. For an FHA or VA loan, you can apply for a mortgage as soon as you receive a dismissal or discharge in your bankruptcy case.
Contact Our Experienced West Palm Beach Bankruptcy Attorneys
If you have questions about getting a mortgage after bankruptcy or other concerns about the bankruptcy process, an experienced West Palm Beach bankruptcy attorney at our firm can help. Contact Kelley Kaplan & Eller to learn more.