If you have filed a Chapter 7 or Chapter 13 bankruptcy, or you have gone through a foreclosure, you may be wondering how long it will take before you can buy a new home. No two cases are identical, but how you handle your credit after your bankruptcy or foreclosure plays a significant role.
Buying a Home after Bankruptcy
If you file a Chapter 7 case, the date you obtain your discharge starts the clock ticking on when you will qualify for a home loan. From your discharge date, it is usually four years before you are eligible for a conventional loan and two years to obtain FHA or VA financing. Of course, these are all estimates on the timing and every individual’s situation is different.
If you file a Chapter 13 case, you may qualify for a conventional loan two years following your discharge order. The time frame may be even shorter for FHA and VA loans. Your post-bankruptcy credit activity will play an important part of how quickly you can obtain a home loan.
Buying a Home after Foreclosure
If you have lost a home in a foreclosure, you may have to wait seven years before you qualify for a conventional loan. However, some borrowers may be able to provide proof that the foreclosure resulted from events out of their control and shorten the time if you are also able to make a 10% down payment. You can usually qualify for a FHA loan after three years has passed from your foreclosure. It should be noted, however, that if you foreclosure occurred on a FHA, VA, or USDA loan, you may be required to wait three years before applying for another.
Buying a Home after Bankruptcy & Foreclosure
If you have filed for bankruptcy protection and had a home foreclosed, the time you must wait before applying for another home loan is more complicated to figure out. If you obtained a discharge of the mortgage loan debt associated with the foreclosure, lenders will usually follow the bankruptcy timeline and disregard the subsequent foreclosure. In other words, you do not get a double penalty.
The most important factor in qualifying for a new home loan after a negative event is to rebuild your credit score. Lenders want to see that you are taking your credit seriously and working to re-establish your credit score. While bankruptcy and foreclosure add risk to your loan file, it is important to understand that neither has to be devastation.
We are debt relief lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation with an attorney at Levitt & Slafkes, P.C..