Chasing A Mortgage After A Bankruptcy

When can you qualify for an AZ mortgage and purchase a home after a bankruptcy?  A very popular question for clients that have a bk in their rear view mirror.  Let’s jump right in and help you figure out how soon you can get off the sidelines and become a proud new Phoenix area homeowner once again!

How Does Timing Tick after a Bankruptcy

For both a chapter 7 bankruptcy and a chapter 13 bankruptcy the mortgage clock starts ticking on the discharge date NOT the filing date.  This is a very important distinction as these dates are typically months apart.  When a Phoenix area mortgage lender is evaluating your mortgage application, they will need to determine how long it has been from your bankruptcy discharge date.

How long do you have to wait to qualify after a bk is a question that has multiple answers.  The different answers depend on 3 key details:

1. How long it has been since your bankruptcy was discharged
2. What type of bankruptcy you filed/discharged (chapter 7 or chapter 13)
3  What type of mortgage you are applying for

How Long do You Wait After a Bankruptcy for a Home Loan?

Conventional Mortgage BK Regulations:
Chapter 13: You must wait 2 Years after discharge date AND have made timely payments on your bankruptcy (bankruptcy trustee must also grant you written permission to purchase a home if you are still in the chapter 13 bk).

Chapter 7: You must wait 4 years after your discharge date.

FHA Mortgage BK Regulations:
Chapter 13:  You must wait 1 year after your discharge date AND have made timely payments on your bankruptcy (bankruptcy trustee must also grant you written permission to purchase a home if you are still in the chapter 13 bk).  Applications considered prior to 2 years from discharge date will be processed as manual approvals and considered on a case by case basis.

Chapter 7: You must wait 2 years after discharge date UNLESS you can prove that the chapter 7 bk was the result of extenuating circumstances beyond your control (FHA deems an extenuating circumstance to be death or serious injury of a primary wage earner) – less than 1 year is not acceptable even if you can prove that you filed a chapter 7 bk due to extenuating circumstances.

VA Mortgage BK Regulations:
Chapter 13: You must wait at least 1 year after your discharge date AND have made timely payments on your bankruptcy (bankruptcy trustee must also grant you written permission to purchase a home if you are still in the chapter 13).  Applications considered prior to 2 years from discharge date will be processed as manual approvals and considered on a case by case basis.

Chapter 7: You must wait at least 1 year after your discharge date.  Applications considered prior to 2 years from discharge date will be processed as manual approvals and considered on a case by case basis.  Standard waiting time for automated approval is 2 years from discharge date.

If you have filed bankruptcy and you are interested in qualifying for a new mortgage please contact my team and I.  There are many different factors that need to be considered when we are helping a client obtain home loan approval after a bankruptcy.

By Jeremy House
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