When you file for bankruptcy, it means you’re in a financial situation you don’t think you can get out of without help. Such financial hardships occur for a wide variety of reasons–sometimes as a result of poor financial responsibility or medical debts.
When you file for bankruptcy, it’s going to make it difficult to obtain a loan any time soon. This means it may be a while before you can buy a house after bankruptcy.
When can you buy a house after bankruptcy?
Because you’re likely going to need a mortgage to buy a house, lenders will look at your credit history to determine how much of a lending risk you are. A certain amount of time has to pass after you file for bankruptcy for lenders to begin feeling comfortable approving a mortgage.
If you want a conventional loan from a bank, you’ll need to wait at least four years. Conventional loans have rigorous requirements that you need to meet; this includes a solid credit score. If you can prove extenuating circumstances (meaning the bankruptcy was out of your control), then you may only have to wait two years.
If you have more than one bankruptcy on your record, you may need to wait 5 years. If you’re applying for an FHA loan, then you only have to wait two years since FHA loans are federally backed and less of a risk for lenders. You may only have to wait between 1 and two years for a VA loan.
How soon you can buy a house after bankruptcy depends on what type of loan you’re applying for as well as the current state of your credit report. For more information on home mortgages, contact us at Randy Lindsay today.