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
September 8, 2023Borrowers considering an FHA loan should be familiar with some basic loan terminology. These loans are popular among first-time homebuyers and those with lower credit scores because they often offer more flexible eligibility requirements and lower down payment options.
September 2, 2023You may have heard the terms co-borrower and cosigner in connection with your FHA loan process, but aren't sure about the distinction. Both a co-borrower and a cosigner can help a primary borrower qualify for a mortgage, but they have different roles and responsibilities.
August 27, 2023The Federal Housing Administration has specific credit requirements and guidelines for borrowers looking to buy or refinance homes with an FHA loan. In addition to what FHA guidelines state, lenders may have more stringent requirements that may vary from one lender to another.
August 23, 2023Mortgage APR (Annual Percentage Rate) and a loan's interest rate are two different things, although they are closely related. Understanding the difference is an important part of a borrower's analysis of the true cost of their mortgage.
August 19, 2023FHA refinance loans allow homeowners with existing FHA loans to refinance their mortgages. These loans are designed to help borrowers take advantage of lower interest rates, reduce their monthly mortgage payments, or access equity in their homes for various purposes.
