Profile picture for norrisca

I just filed for bankruptcy and working to bring up my credit. How long before I can get a mortgage?

I just filed for bankrupcy due to a small business gone bad but have a great new job, good income and am working to increase my credit score by using and paying off 2 unsecured credit cards. Will also get a secured credit card and use it and pay it off each month. How long will it take before I can get a lender to give me a mortgage?  Also, any other hints to help increase my credit score?
  • January 17 2011 - Denver
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Answers (10)

Best Answer

Here is a fantastic article from the Association of Realtors that will give you answers with regard to your specific situation. Scroll down to the bottom of the article to see about bankruptcy. It also answers the same question for foreclosure, short sale, and deed in leu of foreclosure.
A Complete & Easy Guide
  • February 02 2011
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Profile picture for norrisca
Thank you Valerie. This was a great article and the information on the bankruptcy was outstanding! I truly appreciate your response. Christine
  • February 03 2011
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Hi, most often it takes 7 years to "clear out" a bankruptcy.  However, you may receive a new credit card and by paying month on your balance that improves your credit.  I wish you the best.
  • January 17 2011
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You can purchase with an FHA loan in exactly two years to the exact date of discharge.  We help clients just like yourself everyday of every month.  Some key points to keep in mind: 1) DON'T be late on anything after a BK. 2) The time frame is based on the fact that there is not a short sale or foreclosure issue that could effect the timeline. 3) Keep credit lines open and paid down or off.  However, do use these lines of credit, just keep them paid on time and under the 30% of spending limit values.  4) If your new job is in a different line of work thatn your small business was, you do need some time on that new job, but it should fit in nicely with your two year FHA regulation time frame.  Please keep an eye on your credit report for free at www.myfreecreditreport.com to make sure that somebody you filed on isn't trying to pull a fast one on you and get old stuff cleaned up and/or removed.  Hope this helps and you are definately on your way to a new life, great credit and another home!
  • January 17 2011
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Profile picture for norrisca
Thank you for all of your quick replies.
  • January 17 2011
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Profile picture for David Widlund
All of the real estate agents who have answered may be happy to learn that it is currently 2 years from the date your bankruptcy is discharged according to the latest FHA handbook available at HUD.gov You will want to add one more credit line for at least 12 months prior to applying and be able to document 12 months of on-time rent payments. You need to have any collections paid at that time as well, but the bankruptcy should have taken care if any of those. Current down-payment requirement is 3.5%. If you are self-employed, you souls consult with a knowledgeable lender to help determine whether your income as reported to the IRS will be sufficient for the loan you may want. There will likely be a minimum credit score requirement so get good advice about which steps will lead to the best possible score. Good luck!
  • January 17 2011
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Profile picture for wetdawgs

Please note: the eligibility timing often has a clock start from date of discharge, rather than date of filing.

Good luck at getting back on your feet.

  • January 17 2011
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For FHA and VA, it's currently 3 years from date of discharge, not date of filing.  For conventional loans, it depends on the lender.  And it's entirely possible that FHA/VA could change their criteria over the coming years.  They've been slowly tightening their standards over the past year or so just like conventional lenders. 

  • January 17 2011
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It's 3 years from deed transfer for FHA.  All other depend on bank...up to 7 years.

Brian
  • January 17 2011
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Profile picture for Nick Zappa
According to one of the lenders we use it is 7 years for Fannie Mae and Freddie Mac.
3 Years for VA, FHA.
They might make an exception, check with a local lender.
  • January 17 2011
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