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Foreclosure, Bankruptcy and FHA - How long do I have to wait to buy a home?

Because of the economy, more and more people are wondering what the consequences of their bankruptcy or foreclosure are in regards getting a mortgage loan and buying real estate.

  • How long do I have to wait to buy a home after a foreclosure?
  • How long do I have to wait to get a home loan after declaring bankruptcy?

The rules for FHA and conventional loans are different, so I'm going to go with FHA, since they're easier.

Foreclosure

Three years needs to pass, with good payment history, after a foreclosure to get approved for an FHA loan. There are exceptions to this but they are very restrictive - Only serious illness or death of a primary wage earner. Job loss, transfer or inability to sell the home do NOT count as exceptions.

Bankruptcy - Chapter 7

Two years need to pass, with good payment history, after a chapter 7 bankruptcy is DISCHARGED to get approved for an FHA loan. There is an exception down to one year under strict guidelines - Must show that the circumstances were out of your control and that you have the ability to manage your finances since the BK.

Bankruptcy - Chapter 13

A buyer can qualify for an FHA loan with a Chapter 13 bankruptcy as long as they have had at least 12 months with a good payment history according to the plan.

Other important notes:

  • These items stay on your credit for as long as 11 years.
  • Bankruptcy or foreclosures within the last 7 years must be disclosed on your mortgage application. Late payments after these types of events are an easy way to get denied.
  • Patrion can only give a mortgage loan to someone with a credit score of 620 or higher. If you meet the above guidelines, but haven't built up your credit over 620, you wouldn't qualify.

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Top Hemet Mortgage & Real Estate Articles:

Looking to buy real estate?

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. Patrion Mortgage is a direct lender and a division of Altura Credit Union (formerly Riverside County's Credit Union). To buy or refinance real estate in Hemet, Riverside County, California visit www.HemetHomeLoans.com or call 951.571.5751

Posted Thursday Mar 05