Mortgage Q & A: Getting A Home Loan After Bankruptcy
Q: My husband says we can’t buy a home because we wrecked our credit when we completed a Chapter 7 bankruptcy in February 2010. We had no choice as we both lost our jobs in the recession and were out of work for several months. We have rebuilt our savings and have one credit card that we pay in full every month. We have had new full-time jobs since 2011 and want to buy a small home or condo before home prices and mortgage rates become unaffordable. Can we get approved for a home loan after bankruptcy?
A: Although we can’t guarantee mortgage approval, it is possible to qualify for a home loan after filing bankruptcy. In general, Fannie Mae guidelines allow borrowers to qualify for conventional mortgage loans four years after a Chapter 7 bankruptcy has been completed (discharged), but certain extenuating circumstances can reduce the post-bankruptcy waiting period to two years after discharge of a Chapter 7 bankruptcy. Although mortgage lender requirements can vary, your bankruptcy alone likely would not disqualify you from financing your next home.
Post-bankruptcy waiting periods vary between one and four years according on the type of mortgage loan and circumstances that caused your bankruptcy. Our network of mortgage lenders can help you find a mortgage based on your situation.
We recommend shopping multiple mortgage quotes to find your best mortgage terms and lowest costs. Consider enrolling in a HUD-approved housing counseling program to learn more about home ownership and its costs. Housing counselors can help you develop a household budget that includes costs for home repairs and maintenance.