How To Get A Mortgage After Bankruptcy
by: Joshua Bucio
A bankruptcy in the past will not stop you from getting a mortgage in the future. The biggest thing you have to do is…wait. The biggest rule for anyone looking to get a mortgage after bankruptcy is the waiting period. Each mortgage program has different waiting periods.
If you exceed the waiting period required for the mortgage program you are looking for, there is also a guideline to make sure you have re-established credit history. If you filed a chapter 7 bankruptcy, you may not have included everything into the discharged debts. An automobile loan is a common debt that doesn’t seem to be included in the total debts discharged in the bankruptcy. This debt will continue to stay open and report to your credit reporting history. Since you filed a chapter 7 bankruptcy to discharge all your debt, you basically have to start over establishing new credit history. The auto loan will help, since it has older history that was never closed, instead of a brand new account that was recently opened. This will help with re-establishing credit history. It’s best to have 3 accounts open with positive payment history reporting to your credit report for 1 year or more. This will help with satisfying the guideline necessary of re-establishing credit history after bankruptcy.
Once you have established new credit history after the bankruptcy, you now have to figure out how long you have to wait until you qualify again. This is the waiting period and it differs for each mortgage program.
Here are the waiting periods for each program:
1. Conventional Mortgage Program
- Chapter 7 Bankruptcy – 4 years or 2 years if documented extenuating circumstances from discharge date.
- Chapter 13 Bankruptcy – 2 years from the discharge date or 4 years from dismissal.
- FHA Mortgage Program – 2 years from the discharge date.
- VA Mortgage Program – 2 years from the discharge date.
- Rural Housing Mortgage Program – 3 years from the discharge date.
Getting a mortgage after a bankruptcy is not that difficult. You mostly have to focus on re-establishing new credit history, while you are waiting for your waiting period to expire. Many people buy a home 2 years after the discharge date of their bankruptcy. You just need to know what to prepare for.