If you’re considering filing for bankruptcy or have already gone through the process, you’re probably wondering how this affects your ability to get a mortgage, and if you can even qualify for one at all. It can be more difficult to get approved for a mortgage after bankruptcy, and there’s likely to be fewer loan programs for you to choose from. But the good news is that, yes, it is possible to qualify for a loan following the bankruptcy.
To get a mortgage after bankruptcy, you’re not bound to a specific loan program. The key is being able to meet the requirements that each loan type has and figuring out with your lender which option works best for you and the home you’re trying to buy. A few types of mortgage loans you might go with include conventional loans, FHA loans, VA loans, USDA loans, or a non-qualified mortgage loan.
What is the required waiting period for a bankruptcy?
Bankruptcy (Chapter 7 or Chapter 11)
A four-year waiting period is required, measured from the discharge or dismissal date of the bankruptcy action.
Exceptions for Extenuating Circumstances:
A two-year waiting period is permitted if extenuating circumstances can be documented, and is measured from the discharge or dismissal date of the bankruptcy action.
Bankruptcy (Chapter 13)
A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The waiting period required for Chapter 13 bankruptcy actions is measured as follows:
two years from the discharge date or
four years from the dismissal date.
The shorter waiting period based on the discharge date recognizes that borrowers have already met a portion of the waiting period within the time needed for the successful completion of a Chapter 13 plan and subsequent discharge. A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four-year waiting period.
Exceptions for Extenuating Circumstances:
A two-year waiting period is permitted after a Chapter 13 dismissal, if extenuating circumstances can be documented. There are no exceptions permitted to the two-year waiting period after a Chapter 13 discharge.
Multiple Bankruptcy Filings
For a borrower with more than one bankruptcy filing within the past seven years, a five-year waiting period is required, measured from the most recent dismissal or discharge date.
Note: The presence of multiple bankruptcies in the borrower’s credit history is evidence of significant derogatory credit and increases the likelihood of future default. Two or more borrowers with individual bankruptcies are not cumulative, and do not constitute multiple bankruptcies. For example, if the borrower has one bankruptcy and the co-borrower has one bankruptcy this is not considered a multiple bankruptcy.
Exceptions for Extenuating Circumstances
A three-year waiting period is permitted if extenuating circumstances can be documented, and is measured from the most recent bankruptcy discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances.
Source:https://fhmtg.com/2021/12/30/can-you-get-a-mortgage-after-bankruptcy/
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