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Can You Get a Mortgage After Bankruptcy?

If you’re considering filing for bankruptcy, you probably have a lot of questions about the process and how it will affect your credit score. You may be wondering what you should do to turn your credit around after the bankruptcy discharge. The Cleveland bankruptcy attorneys at Luftman, Heck & Associates can help. Call them today at (216) 586-6600 for answers to your questions.

Qualifying for a Mortgage After Bankruptcy

One of the most important issues after a Chapter 7 or Chapter 13 bankruptcy is establishing good credit. You may be wondering how long you need to wait to apply for an auto loan or mortgage. Many people wonder if they will ever be able to buy a home after they have a bankruptcy discharge. Despite understandable concern, be assured that you can eventually qualify for a mortgage and other financial endeavors after bankruptcy.

It can be beneficial to wait a period of several years between your bankruptcy discharge and obtaining new loans. The time will allow you to rebuild your credit and qualify for lower interest rates. The higher your credit score, the more attractive your loan offers will be.

Financial institutions will typically agree that you should wait for a period of time after your bankruptcy before attempting to secure a mortgage. The waiting period varies depending on the loan and other factors, but the general requirements are established by the lender.

FHA-Backed Loans

If you filed for Chapter 7 bankruptcy – You must wait at least two years from the date of your bankruptcy discharge – called a “seasoning period.” Some lenders require longer waiting periods prior to approval.

If you filed for Chapter 13 bankruptcy – You may be able to apply for an FHA-backed loan while you are in your Chapter 13 repayment plan. To qualify for this loan type, you must have made regular plan payments for at least one year. You must also have approval from the bankruptcy court. Lenders will carefully inspect your employment history and credit report, among other factors.

USDA Loans

If you filed for Chapter 7 bankruptcy – You must wait three years after your discharge date.

If you filed for Chapter 13 bankruptcy – Like with an FHA loan, you may qualify for a USDA loan as little as one year after you begin your bankruptcy payment plan. The court must also approve your seeking a loan.

Conventional Loans

If you filed for Chapter 7 bankruptcy – To get conventional loans with market interest rates, you need to wait at least four years after your discharge. These loans are typically available to people who can put some money down and have good credit scores. While your bankruptcy will still show up on your credit history, four or more years of credit-rebuilding practice should prove that you can be financially responsible.

If you filed for Chapter 13 bankruptcy – As with Chapter 7 bankruptcy, a conventional loan requires a longer waiting period than the other options. You will likely need to wait at least two years after your discharge.

How the Cleveland Bankruptcy Attorneys Can Help

To get more in-depth answers on getting a mortgage after bankruptcy, you may want to speak to a bankruptcy attorney. Our Cleveland bankruptcy attorneys at Luftman, Heck & Associates are happy to discuss your particular situation. Call (216) 586-6600 today or email us at advice@clevelandbankruptcyattorney.com.