The short answer is yes. These days, lenders are willing to allow borrowers to get a mortgage on the heels of a bankruptcy sooner than was possible in the past.
How long you have to wait depends on a few factors:
Type of Bankruptcy
Chapter 7 Bankruptcy
If you’ve filed Chapter 7 bankruptcy, obtaining a new home through a mortgage broker will have to be put on hold for at least two years. To be exact, you may qualify for a loan two years from the date of your Chapter 7 bankruptcy discharge, not from the date you file. Typically, you will receive the discharge papers just before your case closes. This is when the clock begins ticking.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is a three- to five-year proposition. You can buy a house during that time if you obtain an FHA loan and meet certain conditions, including court approval and proof that you’ve paid 12 months of plan payments.
You’ll be more likely to get the home if you:
- Have not reduced the amount you’ve paid to your creditors
- Are not including the terms of the home purchase you want to make, making the home seller nervous and reluctant to commit to your offer as it’s contingent on the court’s approval
- Consult with an attorney who has experience in bankruptcy
- Consider a repayment plan to help you reach your financial goals
How else do you prove you’ve established a good credit history?
- Open new credit accounts after your bankruptcy and pay your payments on time
- Or avoid credit by paying in cash during the two year wait
No Fault of Your Own
There is one way you may successfully speed up the process. In the case that you filed for bankruptcy because of no fault of your own, you may be entitled to wait only twelve months. Our suggestion is to:
- Demonstrate that filing was beyond your control
- Show that since you filed bankruptcy, you’ve managed your finances reasonably
Don’t let a temporary setback, such as filing for bankruptcy, put a dark cloud over your home ownership dreams. Contact Golden Oak Lending today and learn how we can help you put your best foot forward.