FHA Loan Rules for Borrowers After Filing Bankruptcy
August 10, 2023
Waiting Periods
For Chapter 7 Bankruptcy, borrowers may be eligible for an FHA loan two years after the discharge of the bankruptcy. For Chapter 13 Bankruptcy, borrowers can be eligible for an FHA loan after making 12 on-time payments as part of a repayment plan and receiving permission from the bankruptcy court.
Credit Requirements
After bankruptcy, borrowers should work on rebuilding their credit. A minimum credit score may be required by the lender or FHA. Most lenders typically prefer a score of 580 or higher. However, some may consider borrowers with lower scores on a case-by-case basis with different down payment requirements.
Financial Stability
Lenders will evaluate your financial stability, including your income, employment history, and any post-bankruptcy financial issues. Demonstrating responsible financial behavior and a stable income can increase your chances of loan approval.
Bankruptcy Discharge
Ensure that you have received a discharge from the bankruptcy court. You'll need to provide documentation of this to your lender.
Housing Counseling
FHA may require borrowers with recent bankruptcies to participate in housing counseling programs to ensure they are informed about the responsibilities of homeownership.
Foreclosure
If you've experienced a foreclosure in addition to bankruptcy, separate waiting periods may apply.
Lender Discretion
Lenders have some discretion in their underwriting guidelines, so it's essential to work with an FHA-approved lender who can guide you through the process and provide insights based on your specific situation.
------------------------------
RELATED VIDEOS:
Learn How to Meet FHA Requirements
A Few Tips About Your Fixed Rate Mortgage
Your Proof of Ownership Is the Property Title
FHA Loan Articles
December 10, 2024The FHA announced increased loan limits for 2025, providing those seeking FHA-insured mortgages after January 1st with increased purchasing power. In this article, we explore the key aspects of these limits and their implications for your homeownership goals.
When you are approved for an FHA-insured loan, the FHA guarantees a portion of the loan to the lender, lowering lender risk...
December 9, 2024The Federal Housing Administration (FHA) helps people buy homes, especially those buying for the first time or who might not have perfect credit. In 2025, there is good news for FHA borrowers. FHA home loan limits are going up.
In most places, the FHA loan limit for a single-family home in 2025 is $524,225. This is more than it was in 2024. However, in expensive areas, where houses cost more, the limit can be as high as $1,209,750.
December 5, 2024The Federal Housing Administration (FHA) has some ground rules regarding cash-out refinances. These rules are designed to protect both you and the lender, ensuring you have enough ownership of your home and reducing the risk of foreclosure. How long must you own your home before you can apply for FHA cash-out refinancing?
December 4, 2024When you think about owning a farm, do you dream of vast landscapes and thriving agricultural enterprises? Or are you looking for a quaint farm-style house to live in but not necessarily to start a new farming career?
Borrowers who want to buy a farm residence are in luck with the FHA loan program, which includes options to purchase farm residences.
November 27, 2024If you are new to the home loan process, you may wonder how your loan officer will interpret your application data. How lenient is the lender with issues related to debt, credit utilization, and related factors? We examine some key points, but remember that what follows is not financial advice. Always consult a finance or tax professional for the most current information.
