A bankruptcy will eliminate debts but can also leave your credit in kind of a rough state. But following a bankruptcy, what should you be concerned with? And how long do you need to wait before considering owning a home?
Typically, when it comes to concerns about purchasing a home, often people find themselves worried about one of two things; credit score and having enough money saved for a down payment. After reading this post, our hope is that you are better able to determine your timeline for increasing your chances of being approved for a mortgage.
Knowing the waiting periods for the different types of loans can be reassuring; know that it is possible to take this step toward a sound investment, a home. Generally, having good established/ re-established credit based on 3 or more accounts for 24 months will increase the likelihood of being pre-qualified for a mortgage. With that said, below are the waiting periods for chapter 7 and chapter 13 bankruptcy.
How long after a chapter 7 bankruptcy?
2 Year Waiting Period
An FHA loan has a waiting period of 2 years from date bankruptcy was discharged
A VA loan has a waiting period of 2 years from date bankruptcy was discharged
3 years Waiting Period
A USDA loan has a waiting period of 2 years from date bankruptcy was discharged
4 years Waiting Period
A Conventional loan has a waiting period of 4 years from date bankruptcy was discharged
How long after a chapter 13 bankruptcy?
1 Year Waiting Period
After 12 months of satisfactory payments the home buyer may qualify for an FHA, VA, or USDA loan, with bankruptcy trustee’s approval to purchase.
2-4 Year Waiting Period
2 years from discharge date OR 4 years from dismissal date- Home buyer may qualify for a Conventional loan
If you find yourself in the middle of the waiting period, now is the time to act. Making good credit decisions now will impact your ability to secure a mortgage in the future.
