I often get questions about the effect bankruptcy will have on a person’s
future chances of getting a loan, especially a home loan. Borrowers are
often surprised that bankruptcy does not automatically disqualify a person
for a home loan. In fact, an FHA mortgage loan may be obtained in as little
as one to two years after bankruptcy in many cases.
FHA Loans After Bankruptcy
An FHA loan is a mortgage loan backed by the government—specifically,
the Federal Housing Authority. Since the eligibility standards are less
stringent for an FHA loan than for a regular mortgage loan from the likes
of Fannie Mae or Freddie Mac, you can still qualify if you have a bankruptcy
on your credit report. The guidelines are subject to change, but borrowers
may be able to qualify for an FHA loan with a credit score of around 580
and a 3.5 percent down payment. Credit scores below 580 typically require
at least a 10 percent down payment.
FHA Loans Waiting Period
Eligibility for an FHA loan typically requires two years to have elapsed since a
Chapter 7 bankruptcy and at least one year after a
Chapter 13 bankruptcy. You also have to be able to document good financial decision-making habits
since filing (i.e., no late payments). If you were forced into bankruptcy
because of unforeseen circumstances, such as a major illness or an unexpected
job loss, you may be able to qualify for an FHA loan even sooner.
FHA Loan Amounts
According to the HUD website, the
FHA mortgage limit in San Diego County, California, is as follows:
Don’t worry so much about qualifying for a loan after bankruptcy.
It’s do-able—and it’s something that millions of Americans
are working on right now. To discuss your circumstances, contact attorney
Kerry Denton today at (619) 458-3739 to schedule a free consultation.