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FHA or Conventional Home Loan after Chapter 7

Hello

My husband and I had a Chapter 7 discharge this past August 2013. I realize the waiting periods to qualify for an FHA home loan would be at least two years, and a conventional loan waiting period at least four years.

My question is, after a Chapter 7...would we still be able to qualify for a low down payment FHA home loan after the two + year waiting period (provided that we have re-established a decent credit score, etc)? It does not look like we will have the means to come up with a 20% down payment and really need the low down payment assistance.

We are also going to be older first time buyers (in our 40's when we are able to buy). 

Any info or advice?
  • January 23 2014 - US
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Answers (2)

As you may know, to obtain an FHA loan after a Chapter 7 bankruptcy, you must wait two years from the date your Chapter 7 is discharged. In the case of an FHA loan, you must provide an explanation of the bankruptcy. Although there is an exception for FHA loans. You can possibly obtain an FHA loan after one year if you had an economic event (such as unemployment) that resulted in a loss of income causing you to become bankrupt. Conventional loans have the longest waiting periods. If you want a conventional loan, you must wait four years after receiving a Chapter 7 discharge. When it comes to the FHA loan, you will still be able to have the low down payment (3.5%) as long as you have passed the waiting period and rebuilt your credit. The best thing for you to do is to speak with a lender such as myself to see if you can get started on financing a new home. If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
  • January 24 2014
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Hi lclayton23,


One of the great things about FHA financing is that it does not view a low down payment as an additional risk.  Once you're outside of the two year requirement, and have re-established credit (as you said) you should be good to go!  One bit of unsolicited advice, make sure not to have any 30 day lates on any of your accounts; late payments following a BK are a big "no-no" following a bankruptcy.  In essence, you'll basically need to be able to show that the BK was a result of something out of your control (job loss, etc.) and any kind of pattern of delinquency would make that much more difficult.

I am more than happy to provide any additional information you need, however I ask that you send any follow up questions to me through my Zillow profile as I rarely re-visit advice posts.

Hope this helps!


Thanks,
Aaron 
  • January 23 2014
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