One reason to choose a FHA loan vs. a conventional loan in California is that FHA home loans have a shorter waiting period after a Chapter 7 bankruptcy to be approved. Â FHA home loans only require a two year wait after bankruptcy to apply. Â Conventional home loans require a four year wait after Chapter 7 bankruptcy. Â So as you can see there is a substantially longer wait to get a conventional home loan after bankruptcy.
If you are applying for a FHA loan after bankruptcy, you want to make sure you know the discharge date of your Chapter 7. Â It will be two years from that date that you can apply for a FHA loan. Â Additionally, you want to make sure that you have NO derogatory items on your credit following your bankruptcy. Â The FHA underwriter will take seriously even one small late payment after a bankruptcy. Â They want to see that your credit is squeaky clean following the bankruptcy.
Also, you will want to re-establish credit following a bankruptcy. Â This means you should try to get some accounts with store cards or credit cards that you keep small balances on and pay off regularly to show that you are making payments on time reporting to the credit bureaus. Â
Read more about this topic and more at San Diego Mortgage Blog.
Many borrowers that have had Chapter 7 bankruptcies in the past few years have included mortgages in those bankruptcies. Â If this is the case, you will have to find out when the property tied to the mortgage was foreclosed upon and sold. Â You will have to wait three years from the date of sale to apply for a FHA home loan.
Feel free to call me at 858-922-7899 or email me at email@example.com if you have any questions about home loan financing in California.Rob Chomentowski
Sr. Loan Officer