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Buying a Home After a California Bankruptcy: Getting an FHA Home Loan

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:

One-Family: $697,500

Two-Family: $892,950

Three-Family: $1,079,350

Four-Family: $1,341,350

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.