Home Buying in 75238>Question Details

F.bauer, Both Buyer and Seller in Dallas, TX

how long after a discharged bankruptcy will we be able to buy a house?

Asked by F.bauer, Dallas, TX Fri Jun 24, 2011

Help the community by answering this question:


FHA will take you after 2yrs.
Need to re-establish credit and have no derogatory credit since BK 7.

If BK-13, then you can apply anytime if all of the BK payments were made on time.

You will get the same rate as someone with perfect credit.

Let me know if I can answer any follow up questions.

Tom Burris
Mortgage Banker
(214) 763-4629 cell/text/nights/weekends(Really!!)
Lending all across the entire Great State of Texas!!
1 vote Thank Flag Link Sun Jun 26, 2011
If it was a Ch 7...

• 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.)
• VA requires 2-years BK discharge
• USDA requires 3-years BK discharge (only 1 year for extenuating circumstances)
• Fannie Mae & Freddie Mac require 4 years (only 2 years for extenuating circumstances)

If it was a Ch 13...

• 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.
• If it was a dismissed BK then 2 years from the dismissal date for FHA or VA financing
• 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.
1 vote Thank Flag Link Fri Jun 24, 2011
FHA has new regulation related with these matter. Depending on each case, but now you can be able to get a mortgage loan after 12 months of consecutive payments on time and providing that you have a good letter of explanation of the circumstances that force you to be in that situation.

Shop around for a mortgage broker, they have access to many banks, private lenders and many different programs.

All the best,

Maria Cipollone

0 votes Thank Flag Link Wed Aug 28, 2013
Chapter 7 or 11 bankruptcy – 4 years (2 years in certain extenuating circumstances)

Chapter 13 bankruptcy – 2 years from the date of discharge, or 4 years from the date a case is dismissed (2 years in certain extenuating circumstances)

Check if you qualify for a mortgage. Try http://www.whywaitbuytoday.com
0 votes Thank Flag Link Sat Aug 24, 2013
Generally speaking, it is 2-years after a Chapter 7 discharge and last 12-months of on-time payments for a Chapter 13 bankruptcy. These times may be longer if you had a foreclosure as part of your bankruptcy then we have to look at the date the foreclosure was sold to an end-user as well as if a CAIVRS claim exists. All this notwithstanding, you will need to re-establish post-bankruptcy credit and, in most situations, no late payments since the bankruptcy. I work with lenders that will accept mid-scores as low as 580 with all other conditions being met. Please let me know if I may assist further.

Jack Gillis, M.B.A., J.D.
Nathan Grace Real Estate
5619 Dyer Street | Suite 100
Dallas, TX 75206
Cell: 214.718.4910
Fax: 469.854.0673
0 votes Thank Flag Link Sat Jul 9, 2011
Rule of thumb is 3 yrs but there are those lenders who will charge a very high rate of interest if you want to pay it. In the mean time show stability in employment and paying your bills on time. I would save for a large down payment. which will give you some bargaining power.
0 votes Thank Flag Link Sat Jun 25, 2011
FHA announced mortgage insurance premium based on risk (lower scores pay more for their MI), but they retracted the rule a couple of years ago. So, risk-based MIP is on indefinite hold.

You might find, however, that lenders willing to look at your file will charge more than other, high-volume lenders. The high-volume lenders cherry-pick the lowest risk files and flush the other people out of their files by refusing to deal with them. In effect the higher rate lenders who do lower volumes wind up with those people with less than sterling credit.
Web Reference: http://www.Mortgages-TX.com
0 votes Thank Flag Link Sat Jun 25, 2011
Tim - actually you won't pay any different interest rates than someone who never had a BK at all, as those guidelines are for the same exact loan programs that someone who never had a BK would likely be pursuing as well. The only difference would be credit score, as someone who recently had a BK may not have as high as a credit score as someone who never had a BK (not always the truth but in general it'll be that way). So if the credit score is lower than someone who didn't have a BK, then yes you would get higher rates... but if the credit score is the same as someone who had a BK, and the BK seasoning requirements are met that I laid out in my initial response, then the same exact interest rates & fees apply.
0 votes Thank Flag Link Sat Jun 25, 2011
Shane's answer is comprehensive.
The short form is:
4 years for conventional, 2 years for FHA/VA - provided you have had ZERO problems after discharge (no lates, no collections, etc). You must have learned your lesson and now practice self-discipline.

The extenuating circumstances are a bit tricky. If the primary income-earner died, for example, and or had an extended hospitalization, that might unavoidable enough to be considered extenuating. Things you chose to do will not qualify for extenuating circumstances.
Web Reference: http://www.Mortgages-TX.com
0 votes Thank Flag Link Sat Jun 25, 2011
Two excellent answers already! I'd only add that you should keep in mind lenders will charge you a higher mortgage rate within the short time-frames listed in the other answers.

If you can afford to wait a bit longer (another couple of years beyond the time-frames listed), you'll get a much more favorable rate and your payments will be lower. With that said, there ARE lenders out there who will lend within the stated time-frames but you'll be paying the "sub-prime" mortgage rates that are always higher.

Also, if you can swing it, try speaking to a financial planning expert as soon as possible to help you do some proper expense planning and maybe even save more money for your downpayment.

Good luck and I hope you find a great house!

0 votes Thank Flag Link Sat Jun 25, 2011
Most lenders could go 2 or more years out of BK , complete a loan application refer all your concerns with mortgage broker

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Sat Jun 25, 2011
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