If you have gone through a foreclosure, you might qualify for a new FHA mortgage loan after waiting 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 mortgage before you complete the plan. Read on to learn more.
The Federal Housing Administration (FHA), which is a 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 your lender, not the FHA.
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.
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 obtain an FHA loan before you complete your plan if you meet the following conditions:
You've paid 12 months of plan payments.
(Learn more in When Can I Get a Mortgage After Bankruptcy?)
(To learn more about bankruptcy in general, including bankruptcy basics, bankruptcy procedures, and specific information about filing bankruptcy in your state, visit our Bankruptcy area.)