Can You Buy A House After Bankruptcy?
This Article Is About Buying A Home After Bankruptcy And Qualify For A Mortgage
Is It Possible In Buying A Home After Bankruptcy?
The answer is yes, homebuyers can qualify for a mortgage after bankruptcy. Bankruptcy is a federal law that allows consumers in debt to have their debts restructured and/or discharged so they can have a fresh start in life. Many Americans are under the impression bankruptcy is the end of the world.
They think they can no longer get credit and/or a mortgage to purchase a home. It is the exact opposite. Bankruptcy is a good thing. It is a federal law that allows consumers who are in debt to have their debts restructured and/or discharged. The team at Capital Lending Network, Inc. has helped countless clients rebuild their credit after bankruptcy. We have helped many of our borrowers get their credit scores higher than 700 FICO in less than one year after the bankruptcy discharged date.
There are different types of home mortgage programs for home buyers. All mortgage loan programs allow borrowers to qualify for a home loan after bankruptcy. However, there are waiting period requirements after bankruptcy on government and conventional loans. The waiting period requirements are different depending on the particular mortgage program. The waiting period and guidelines are different on the type of bankruptcy.
Capital Lending Network, Inc. has non-QM mortgages with no waiting period after bankruptcy. However, a 30% down payment is required on non-QM mortgages one day after bankruptcy and/or foreclosure.
Types Of Consumer Bankruptcy
There are two types of consumer bankruptcies. Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
Chapter 7 Bankruptcy is also called total liquidation bankruptcy. Chapter 7 Bankruptcy benefit consumers without a job and little to no assets and a lot of debts. All debts will get discharged with Chapter 7 Bankruptcy. A consumer normally gets the Chapter 7 Bankruptcy discharged in 90 days after filing.
After the Chapter 7 Bankruptcy has been discharged, the consumer is debt-free. Most debts and judgments are discharged with Chapter 7 Bankruptcy. Government debts, debts incurred due to fraud, and fines from government agencies are not normally dischargeable with Chapter 7 Bankruptcy.
Chapter 13 Bankruptcy is a restructuring debt repayment plan. You need a consistent full-time job and income to be eligible for Chapter 13 Bankruptcy. The U.S. Bankruptcy Courts will appoint a trustee.
The bankruptcy trustee will restructure the debt. Normally a 60-month repayment plan is structured.
A percentage of the consumer’s pay is allocated to pay creditors. After the consumer makes the repayment under the repayment plan, the balance of the debt is discharged by the trustee. What this means is the consumer is debt-free after completing the repayment plan. Normally, the repayment plan is for three to five years on Chapter 13 Bankruptcy.
VA and FHA loans are the only two mortgage programs that allow homebuyers to purchase a home during the Chapter 13 Bankruptcy repayment plan. Chapter 13 Bankruptcy does not have to be discharged.
Buying A Home After Bankruptcy: Waiting Period Requirements
There are three different types of government loan programs:
- FHA Loans
- VA Loans
- USDA Loans
Waiting Period After Bankruptcy On Government Loans.
There is a two-year waiting period requirement after the Chapter 7 Bankruptcy discharged date.
VA loans also require a two-year waiting period requirement after the Chapter 7 Bankruptcy discharged date. There is a three-year waiting period requirement after the Chapter 7 Bankruptcy discharged date to qualify for USDA Loans. FHA and VA loans are the only two mortgage loan programs that can be manually underwritten. Borrowers in Chapter 13 Bankruptcy repayment plan can qualify for FHA and/or VA loans during Chapter 13 repayment plan with Trustee Approval. It needs to be a manual underwrite.
There is no waiting period to qualify for an FHA and/or VA loan after the Chapter 13 Bankruptcy discharged date.
Any Chapter 13 Bankruptcy that has not been seasoned for 24 months after the discharged date, the file needs to be manually underwritten on FHA and/or VA loans.
Waiting Period After Bankruptcy On Conventional Loans
Fannie Mae And Freddie Mac Agency Guidelines On Waiting Period After Bankruptcy On Conventional Loans:
- There is a four-year waiting period after Chapter 7 Bankruptcy to qualify for conventional loans.
- There is a four-year waiting period after the Chapter 13 Bankruptcy dismissal date to qualify for conventional loans.
- There is a two-year waiting period after the Chapter 13 Bankruptcy discharged date to qualify for conventional loans.
Just meeting the mandatory waiting period after bankruptcy does not automatically guarantee borrowers to qualify for a mortgage. Rebuilt and re-established credit is required. No late payments after bankruptcy. Late payments after bankruptcy can cause a mortgage loan denial. Most lenders consider any late payments after bankruptcy and/or a housing event as a second offender and will not approve borrowers. This holds true even though the borrower gets an approve/eligible per automated underwriting system (AUS). However, one or two late payments after bankruptcy and/or a housing event is not always a deal killer. Capital Lending Network, Inc. will approve borrowers with late payments after bankruptcy and/or foreclosure as long as they can get an approve/eligible per automated underwriting system. Capital Lending Network, Inc. has no lender overlays on government and conventional loans. Capital Lending Network also offers non-QM mortgages one day out of bankruptcy and/or foreclosure with a 30% down payment. There is no waiting period after bankruptcy and/or foreclosure on non-QM loans. As the bankruptcy and/or housing event ages, the down payment requirement is lower than the 30% down payment on one day out of bankruptcy. Rebuilt and re-established credit is a must after bankruptcy.