It’s entirely possible to get a mortgage after a bankruptcy.
If you’re wondering how to qualify for a conventional loan after bankruptcy, you’re not alone.
A lot of people are unsure about their options after they’ve gone through bankruptcy.
The good news is that there are plenty of lenders who will work with you, as long as you meet certain requirements.
In this article, we’ll talk about what those requirements are and how to go about applying for a conventional loan after a bankruptcy.
Bankruptcy Waiting Period – Conventional Requirements
One of the most important things you’ll need to do is wait until your bankruptcy has been discharged. This means that the debt has been wiped out and you’re starting fresh.
The amount of time you need to wait after your bankruptcy is discharged depends on the type of bankruptcy and your loan type.
A convnetional loan will require at least four years since your discharge date for a Chapter 7, and two years for a Chapter 13, before you can be considered for a mortgage.
We have other programs availalbe that require only a two year waiting period.
Waiting period is longer if you’ve had multiple bankruptcy filings.
If you’ve had more than one bankruptcy filing within the past seven years, a five-year waiting period is required, measured from the most recent discharge or dismissal date.
In addition to waiting, there are some other Conventional requirements
Just meeting the mandatory waiting period requirement does not automatically qualify you for a conventional mortgage.
A bankruptcy, tells a lender the person filing had trouble paying bills.
The waiting period is required because lenders want to make sure that someone who had to file bankruptcy is back on their feet and is now a good risk to lend to.
In addition to the waiting period, there are a few other things that the lenders will look at. Here are a few:
The bankruptcy probably impacted your score signifigantly. During the waiting period, it’s a good idea to rebuild your score.
One of the easiest ways to improve your credit is by opening a few credit cards, keeping the balances low, and paying the bill on time every month.
DO NOT HAVE ANY LATE PAYMENTS
Having late payments after a bankruptcy will kill your score and your chance of qualifying for a conventional mortgage.
Build up your savings
The more money you have in savings, the less risk you are to a lender.
If you fall back on hard times, you have the ability to repay your mortgage by dipping into your savings. This is a strong compensating factor when trying to get a mortgage after a bankruptcy.
Can you get a Conventional Loan while in a Bankruptcy?
All lenders require that the bankruptcy be either discharged or dismissed before you can qualify.
Other Loan Options
Many loan types require a waiting period before you can even apply.
FHA Loan –
A government loan, only requires a 2 year waiting period after a Chapter 7 discharge, and on Chapter 13 – only requires 12 months of payments to be made to the trustee.
Read more about the: FHA Loan Requirements
VA Loan –
A government loan for our Miitary members. A 2 year waiting period after a Chapter 7 discharge, Chapter 13 – just need 12 months of payments to be made to trustee to qualify.
Get more info on the: VA loan requirements
This loan type does not require a waiting period after a bankruptcy but has a higher interest rate than the other programs and will require reserves (assets / savings).
Learn more about: NON-qm Loans
Bankruptcy doesn’t have to put an end to your dream of owning a home. The key is to take positive steps with your finances and credit.
While waiting for the mandatory “wait period”, use that time to do the work that will help you qualify.
How long after a Chapter 7 bankruptcy can I get a conventional loan?
To qualify for a conventional loan after Chapter 7 bankruptcy, you’ll need to wait 4 years after the discharge date.
How long after a Chapter 13 bankruptcy can I get a conventional loan?
To qualify for a conventional loan after Chapter 13 bankruptcy, you’ll need to wait 2 years after the discharge date.
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