How Long Do I Have to Wait to Buy a Home After Bankruptcy?

 Posted on October 14,2024 in Building Credit

Bankruptcy is a last resort option to pull yourself out of major debt. The reason it is a last resort is that it is still a major financial setback that can affect your ability to take on other debt like car loans and mortgages. However, your options are not limited forever. Depending on the lender and the type of bankruptcy that is discharged, you will be able to take out a mortgage for a home after a certain waiting period. This article will discuss what those waiting periods are and how to contact a Texas bankruptcy attorney who can walk you through your options.

How Long Is the Waiting Period to Buy a Home After Bankruptcy?

The amount of time you need to wait to take out a mortgage after your debts are discharged through bankruptcy depends on the type of bankruptcy and the type of lender. For example:

• Conventional mortgages: If you filed Chapter 7 bankruptcy and want to take out a mortgage from a conventional lender like a bank or credit union, there is typically a four-year waiting period. You will have to wait two years after a Chapter 13 discharge.
• FHA loans: If you want to apply for a loan backed by the Federal Housing Administration (FHA), there is a waiting period of at least two years after a Chapter 7 discharge. For a Chapter 13 discharge, you can apply after at least one year of making all your payments in your repayment plan on time.
• USDA loans: The US Department of Agriculture (USDA) offers loans to certain homebuyers in rural areas. For a USDA-backed mortgage, you typically must wait at least three years after a Chapter 7 discharge and a year of making timely repayments after a Chapter 13 discharge.
• VA loans: The waiting periods for mortgages backed by the US Department of Veteran Affairs (VA) are similar to FHA loans with two years after Chapter 7 and one year of timely repayments after Chapter 13.

How Can I Help My Chances of Getting a Loan?

Lenders have other requirements for getting a loan, so a waiting period is a great opportunity to work on meeting those and increasing your chances of obtaining approval. During the waiting period, you should:

• Make sure you have a steady income.
• With a steady income, you can start rebuilding your credit by paying off bills. You can also rebuild credit by applying for a secured credit card, obtaining a credit builder loan, or using other tools specifically designed to help people build up their credit scores.
• Start saving money for a down payment.

Contact a Boerne, TX Bankruptcy Attorney

Bankruptcy can have a major effect on your financial future. Hire a Schertz, TX bankruptcy lawyer who will not only walk you through the bankruptcy process but also guide you through life after discharge. At Law Offices of Chance M. McGhee, we understand the challenges bankruptcy filers face and we are ready to offer you a legal strategy tailored to your needs. Schedule a free consultation today by calling 210-342-3400 now.