â€¢ FHA requires 2-years BK discharge (only 1 year if it was due to extenuating circumstances, such as medical or death of a wage earner, etc.)
â€¢ VA requires 2-years BK discharge
â€¢ USDA requires 3-years BK discharge (only 1 year for extenuating circumstances)
â€¢ Fannie Mae & Freddie Mac require 4 years (only 2 years for extenuating circumstances)
If it was a Ch 13...
â€¢ You can be still *in* a Ch 13 BK with FHA or VA financing, it is just required that:
- one year of the pay-out period under the bankruptcy has elapsed
- the borrower's payment performance has been satisfactory and all required payments have been made on time, and
- the borrower has received written permission from bankruptcy court to enter into the mortgage transaction.
â€¢ If it was a dismissed BK then 2 years from the dismissal date for FHA or VA financing
â€¢ Fannie Mae & Freddie Mac require 2 years from discharge date & 4 years from dismissal date (2 years from dismissal with extenuating circumstances)
In all situations you need at least 12 months of re-established credit and 3 traditional trade lines, some lenders want 3 trade lines of 12 months each. Trade lines that survived the BK, such as a credit card you kept open, a car loan you maintained payments on/didn't include, student loans that couldn't be included, etc. can count towards the re-established credit.
Other than medical collections that can be properly explained, if there are any late payments or delinquent accounts (collections, charge-offs, judgments, tax liens) after the BK then the time seasoning often starts over again from the latest late payment/delinquent mark (underwriter's discretion). Having a verifiable on time housing payment history goes a long way to making an underwriter feel comfortable, as well as taking a pre-purchase housing counseling class with a budgeting/financial model. Practically anything you can do to prove that you have made & kept a vow to make all payments on time will be helpful.
It is good to hear that you are back on the road to a good financial path after some hard times. My suggestion would be to keep up with your on-time payments and establish some other credit also. Apply for credit and make sure you also pay that on time. Paying rent on time for a few years (normally a minimum of 2, but I would talk with a mortgage advisor because it seems to range from 2-7 years) is great, but you also need to establish other forms of credit to build a good, strong credit history.
Good luck in your future - you are on the right path!
I believe you have to wait 2 years after you filed bankruptcy before you can get a loan to purchase a home but there are new bankruptcy laws so it'll be better to talk to your trustee or lawyer to get the best advice. I hope this helps.
Once you file for bankruptcy then the wait period is 18 months to two years and your credit score must show improvement before you can apply for a mortgage.
Here is a link for additional information:
Hope this is helpful.
Good luck to you!
Prudential Connecticut Realty