Depending on the type of bankruptcy that you previously filed, that event may continue to appear as a derogatory event on your credit report for seven to 10 years. You may believe that you must wait for that bankruptcy to fall off of your credit report before you apply for a new home loan, but this is not the case. In fact, many people have successfully applied for a loan after four years or less. What should you know before you apply for a mortgage after filing for bankruptcy?
If you filed for a Chapter 7 bankruptcy, you may qualify for a conventional home loan after at least four years have elapsed. This time period starts when the court dismisses or discharges your loan request. If you are applying for a USDA loan, this may be reduced to three years. For FHA and VA loans, you may only need to wait for two years to pass before you apply.
On the other hand, if you filed for a Chapter 13 bankruptcy, you may qualify for a new home loan as soon as four years after the court has dismissed the filing. If your bankruptcy is discharged, on the other hand, you must wait four years from the filing date or two years from the date of dismissal. If you apply for a USDA loan after filing for Chapter 13 bankruptcy, you may only need to wait 12 months. For FHA and VA home loans, you can apply as soon as the court dismisses or discharges the bankruptcy.
Depending on how long it has been since you filed for bankruptcy, you may qualify for a variety of loan programs. However, you will still need to meet a program’s credit score and income requirements. After filing for bankruptcy, it can take time to reestablish a good credit rating, so this may be a primary factor to turn your attention to. Some ideas to improve your credit rating are to use a secure credit card, to reduce your debt balances and to make your payments on time. Are you ready to learn about the loan programs that you qualify for with your credit rating and other current qualifications? Connect with a member of our MortgageDepot lending team today to get started.
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