Getting an FHA Loan After Foreclosure or Bankruptcy

The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), insures lenders against some of the risk involved in lending to borrowers who often don't qualify for conventional home loans, including first-time homebuyers or those with low or moderate incomes. The loan itself comes from a lender, not the FHA.

If you've gone through a foreclosure, you might qualify for a new FHA-insured mortgage loan after a waiting period of three years. After a Chapter 7 bankruptcy, the waiting period is generally two years. If you file for Chapter 13 bankruptcy, you might be able to get a new FHA-insured mortgage before you complete the plan.

When Can I Get an FHA-Insured Loan After a Foreclosure?

To qualify for an FHA-insured mortgage loan, you usually have to wait at least three years after the foreclosure. A lender might, in some cases, grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the borrower's control.

Getting an FHA-Insured Loan After Bankruptcy

If you file for bankruptcy, you can still qualify for an FHA-insured mortgage afterward, just not right away.

When Can I Get an FHA-Insured Loan After a Chapter 7 Bankruptcy Discharge?

In most cases (but not all), you have to wait two years from the date of your Chapter 7 bankruptcy discharge before you'll qualify for this kind of mortgage loan. Keep in mind that a discharge date isn't the same as the filing date. In most cases, you'll receive your discharge paperwork just before your case closes.

At times, people file for bankruptcy due to no fault of their own. If you fit into this category and can show that filing for bankruptcy was beyond your control, you might be able to reduce the waiting period to twelve months. Additionally, you'll need to show that you've handled your financial affairs responsibly after the bankruptcy.

When Can I Get an FHA-Insured Loan After Filing for Chapter 13 Bankruptcy?

Filing for Chapter 13 bankruptcy is a long three- to five-year process. But that doesn't mean that you can't buy a house during that time. You can get an FHA-insured loan before you complete your plan if you meet the following conditions:

• You've paid 12 months of plan payments.
• The court approves your request to purchase a house with an FHA-insured loan.
• You can demonstrate that the reason you filed for bankruptcy is unlikely to occur again.