Christy John…, Home Buyer in Merrillville, IN

I just filed for bankruptcy and right now I pay rent of 904.00 a month and im always on time. Will I be able to get a loan to purchase a house?

Asked by Christy Johnson, Merrillville, IN Fri Jun 24, 2011

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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Fri Jun 24, 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
Laura Feghali, Agent, Stamford, CT
Sat Jun 25, 2011
To Shane,
Great answer! Thanks for the information.

Laura Feghali
Prudential Connecticut Realty
0 votes
Gary Holleman, Agent, Crown Point, IN
Fri Jun 24, 2011
Yes you will be able to get a mortgage, but the BK will need to season for at least two years from the discharge date. Make sure to document with cancelled rent checks your rent payment along with when the checks cleared the bank to reflect your on time rent payment history. Do NOT be late on any payment since the discharge date or your two year clock will restart. Also make sure that you have reestablished credit since the discharge date - preferably 3+ accounts which are reporting to the bureaus.
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0 votes
Sarah Goulart…, Agent, Plymouth, MA
Fri Jun 24, 2011
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!
0 votes
Chanel Harris, Agent, Merrillville, IN
Fri Jun 24, 2011
Hi Christy
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.
0 votes
Laura Feghali, Agent, Stamford, CT
Fri Jun 24, 2011
Hi Christy,
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!

Laura Feghali
Prudential Connecticut Realty
0 votes
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