Buying a Home After Bankruptcy – Waiting Periods and Mortgage Guidelines

Buying a home after filing bankruptcy in California requires a waiting period before being eligible to qualify for an FHA, VA, USDA, or Conventional home loan.  How soon you can buy again after the bankruptcy (the waiting period) depends on what type of home mortgage loan you plan to use. 

Why?  Because FHA, VA, USDA, and Conventional financing all have different guideline requirements for people who have experienced a chapter 7 or 13 bankruptcy.

Blog post Update 8/17/2013 ==> FHA just announced they are reducing the waiting period to be eligible to buy again after bankruptcy with their new Back to Work – Economic Event extenuating circumstance.

Waiting Period to Buy Again After Bankruptcy

FHA Home Loan After Chapter 7 Bankruptcy

  • 2 years from date of discharge with re-established credit paid as agreed or no new credit obligations incurred
  • Less than 2 years, but not less than 12 months from date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances, and the borrower had since exhibited a documented ability to mange financial affairs in a responsible manner.

FHA Home Loan After Chapter 13 Bankruptcy

  • 1 year payout period from when bankruptcy filed and the borrower’s payment performance has been satisfactory.  All required payments made on time.

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VA – Veterans Home Loan After Chapter 7 Bankruptcy

  • 2 years from date of discharge. Or 12- 23 months from date of discharge if credit re-established and paid as agreed; and was caused by acceptable extenuating circumstances.

VA – Veterans Home Loan After Chapter 13 Bankruptcy

  • 1 year payout period under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time.

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USDA Home Loan After Chapter 7 Bankruptcy

  • 3 years from date of discharge.  Or Less than 3 years from date of discharge may be considered with acceptable extenuating circumstances.

USDA Home Loan After Chapter 13 Bankruptcy

  • 1 year from the date re-payment was completed and bankruptcy was discharged, or 12 months of the re-payment period has elapsed with all payments made on time with permission to enter into a mortgage transaction.
  • Less than 1 year from the date of discharge may be considered with acceptable extenuating circumstances.

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Conventional (Fannie/Freddie) Home Loan After Chapter 7 Bankruptcy

  • 4 years from date of discharge.  Or 2 years from discharge date may be possible with acceptable circumstances.

Conventional (Fannie/Freddie) Home Loan After Chapter 13 Bankruptcy

  • 2 years from date of discharge.  Or 4 years from dismissal date.

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Did You Include Your Home in the Bankruptcy?

Discharging a debt and foreclosure are two different processes.  Most people who include their home in the bankruptcy think they can buy again two years after their bankruptcy is discharged.

Bankruptcy attorney’s never explain to their client that the process of transferring ownership back to the bank is the process of foreclosure.  This process will often take 2-24 months AFTER your bankruptcy is discharged and the waiting period to buy again cannot begin until that happens.

Thus, your waiting period to buy again after bankruptcy is actually based on the foreclosure waiting period and the date title was transferred back to the lender or trustee.  You should read When & How To Buy Again After Foreclosure in California.

Call (951) 215-6119 to find out if you have an acceptable extenuating circumstance to qualify for a mortgage to purchase a home after bankruptcy.

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