Can I apply for FHA loans after bankruptcy? What are the FHA loan bankruptcy guidelines? Do the bankruptcy and foreclosure affect the ability to qualify for FHA loan? Well, the major financial setbacks such foreclosure and bankruptcy affect your financial position. And you need to know the FHA loan bankruptcy guidelines before applying for FHA loan. FHA loans are to provide financial assistance to borrowers with low income and credit issues.
So the people who have some blemish on their credit report or do not have enough money to put down as down payment should take advantage of FHA loans. It is a great opportunity to become a homeowner. But you need to wait for a long time after facing some kind of financial event before applying for an FHA loan.
So let’s talk about the:
- FHA loan after chapter 7 bankruptcy
- FHA loan after chapter 13 bankruptcy
- Seasoning the bankruptcy
FHA loan after chapter 7 bankruptcy:
Anyone can face the financial crises in his life, and sometimes things become worst, and you have to file for bankruptcy. But life gives a second chance to everyone. Chapter 7 bankruptcy allows you to discharge your debts. Under chapter 7 bankruptcy once you are discharged from the debts, you do not need to pay them back.
If you have filed for bankruptcy and want to apply for an FHA loan, you need to wait for at least two years. After two years you can obtain an FHA home loan. But during this period you have to work on building a good credit history.
But in some cases, the borrower may have to wait longer. FHA loan is not for the people who failed to build a good credit history two years after coming out of the bankruptcy.
FHA loan after chapter 13 bankruptcy:
In chapter 13 bankruptcy you have to reconstruct your debt. In simple words instead of discharging the debt and not paying it back, you have to pay the debt back over time. The exciting thing about this bankruptcy is that while still paying on bankruptcy chapter 13 you can obtain FHA loan. But the payments must be paid consistently for one year and verified. You need the written permission from the bankruptcy court to apply for a mortgage loan. If the court grants permission you will be allowed to obtain an FHA loan.
Seasoning the bankruptcy:
Only an approved FHA lender can give you the home mortgage. He is the person who has to follow the guidelines set by the federal housing administration. He will tell you that before applying for the FHA loan, you need two years of seasoning.
The type and cause of bankruptcy play an important role in deciding whether you are eligible to apply for FHA loan or not. You are only legible for the exception if chapter 7 bankruptcy was the result of something out of control such as the death of the income earner.
It means you can apply for FHA loan after twelve months if you have met the income and credit requirements. You consistent credit history is also one of the main factors in deciding your eligibility.
FHA loan bankruptcy waiting period:
It is highly essential to improve your credit history after filing for bankruptcy. You faced a financial event, but it does not mean that you will not be able to come back. There are many ways to increase your credit scores after filing bankruptcy.
You have to make sure that you have not taken any debt before applying for FHA loan after bankruptcy. Similarly, if you face foreclosure, wait for at least three years after coming out. Work on improving your credit score during this period so that you could become eligible to apply for FHA home loan.
Once you have come out of foreclosure and bankruptcy successfully, you can get an FHA loan to buy a house. But make sure that you have followed FHA loan bankruptcy guidelines so that the lender could not find any issue while lending you the money. Your lenders will tell you about the waiting period on the base of your bankruptcy type.