When can you buy a home after you have filed bankruptcy?

Edrie Pfeiffer
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Edrie Pfeiffer, Bankruptcy & Divorce Attorney

Many clients ask us at some point along the process, “Can I still buy a home after filing for bankruptcy?”  The answer is almost always, “Yes.”  The next question is usually, “When can I buy again?”  That’s when things get a little tricky, and that’s what this edition of the newsletter is about.

As a disclaimer, the practices in the mortgage industry are ever-changing, and can vary from lender to lender, so the information below is meant more to give you a general idea of when you might have success, rather than a strict date that you can mark on your calendar.

When you can purchase a home again depends on what type of financing you’ll be using, as well as the Chapter of the Bankruptcy Code under which you file (7 or 13).

FHA Waiting Guidelines (FHA financing is a form of financing offered to first-time homebuyers in which the Federal Housing Authority insures the mortgage loan):  You can usually apply for an FHA loan two years after a Chapter 7 discharge, or one year after a Chapter 13 discharge.

VA Waiting Guidelines (VA financing is a form of financing offered to veterans and their surviving spouses in which the Department of Veterans Affairs guarantees the mortgage loan):  You can usually apply for a VA loan two years after a bankruptcy, whether you file Chapter 7 or Chapter 13.

Conventional Waiting Guidelines (If you are not using FHA or VA financing, you are using conventional financing):  You may apply for a Conventional loan four years after a bankruptcy has been discharged, whether Chapter 7 or Chapter 13.

In any case of the above cases, you may be required to make a larger down payment than otherwise.  Additionally, you will need to have rebuilt your credit score to at least 620-640, depending on the type of financing.  Lastly, the longer you do wait, the better the interest rate you will probably receive, as your credit score should continue improve, so long as you’re making all the payments you’re required to make after the bankruptcy.

For more detailed information, including information on when you might be able to file if your home is foreclosed on or sold via short sale instead, we recommend that you visit the following website:

http://www.homeownershipuniversity.com/home-buyers/buy-again/how-long-do-i-have-to-wait-after-a-bankruptcy-short-sale-or-foreclosure/

For tips on buying a home after filing bankruptcy, check out our article on tips to be able to buy a house after bankruptcy.