Would I be able to purchase a home with a bankruptcy on my credit?

Asked by Christina Watson, Chicago, IL Thu Mar 20, 2014

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Brian Nguyen, Mortgage Broker Or Lender, Mission Viejo, CA
Fri Mar 21, 2014
Yes, it is possible as long as you have rebuilt your credit and sat through the required waiting period. The waiting period depends on the loan you choose and what type of chapter bankruptcy you had. To obtain an FHA loan or a VA loan after a Chapter 7 bankruptcy, you must wait two years from the date your Chapter 7 is discharged. You can obtain an FHA loan during a Chapter 13 bankruptcy as long as you have made 12 months of satisfactory Chapter 13 plan payments, but you must have bankruptcy court approval to get the loan. In the case of either an FHA loan or a VA loan, you must provide an explanation of the bankruptcy. Although there is an exception for FHA loans. You can possibly obtain an FHA loan after one year if you had an economic event (such as unemployment) that resulted in a loss of income causing you to become bankrupt. Conventional loans have the longest waiting periods. If you want a conventional loan, you must wait four years after receiving a Chapter 7 discharge and two years after receiving a Chapter 13 discharge. If your Chapter 13 case was dismissed without a discharge, you must wait four years from the date of the dismissal. If you would really like a mortgage there are also hard money loan options that you can consider. Either way, the best thing for you to do is to speak with a knowledgeable lender to see if you can get started on financing a new home. If you need additional assistance, feel free to reach out. Good luck!

Brian Nguyen
Sr. Mortgage Banker
NMLS # 659743
Phone: 949.667.2887
0 votes
BJ Tregoning, Agent, Chicago, IL
Fri Mar 21, 2014
I would contact a lender and see what options are available to you. Best of Luck.
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Scott Newman, Agent, Chicago, IL
Fri Mar 21, 2014
Believe it or not yes- a reputable lender would need to look into your specific situation though. Let me know if you'd like a referral to one.
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Jeff Nobleza, Agent, Chicago, IL
Fri Mar 21, 2014
You may be able to purchase a home in as little as one year after bankruptcy under the FHA back to work program. You can call Bernard Duganzic with Key Mortgage at 847 508 0190 to see if you qualify.
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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Thu Mar 20, 2014
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 (only 1 year if it was due to extenuating circumstances)
Fannie Mae & Freddie Mac conventional 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 conventional financing 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 with most lenders, some lenders want 3 trade lines of 12 months each. Trade lines that survived a BK, such as a credit card you kept open, a car loan you maintained payments on/didn't include, student loans that you are making payments on that couldn't be included, etc. can count towards the re-established credit.

Shane Milne | Lending in all 50 states | NMLS #81195
shane@thebesthomeloans | 949-273-4161 direct
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Alain Picard, Agent, Puyallup, WA
Thu Mar 20, 2014
It depends on your current credit score and how long the bankruptcy has been as well as the type of loan and a bunch of other things but it is possible to buy with a bankruptcy on your credit.
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