Can You Get an FHA Loan After a Bankruptcy or Foreclosure?

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The straight answer is “yes” but how long will you have to wait to get an FHA loan after these derogatory events?

Well it is true, bad things happen to good people and besides a Non-QM (Non-Qualified Mortgage) FHA/HUD has the most relaxed time frames when it comes to purchasing or refinancing after a foreclosure or bankruptcy.  The Federal Housing Administration (FHA) has a very defined amount of time you must wait before entering into an FHA after a bankruptcy or foreclosure. 

Getting an FHA loan after a Chapter 13 Bankruptcy:
The standard waiting period is two years from the discharge date of a Chapter 13 bankruptcy.  However, a borrower can obtain financing while in a Chapter 13 if the borrower can:

  1. At least one year has elapsed in the Chapter 13 pay-out period
  2. Borrower can provide proof of 12 months timely payments
  3. Borrower receives written bankruptcy court permission

Getting an FHA loan after a Chapter 7 Bankruptcy:
The standard waiting period is three years from the discharge date of a Chapter 7 bankruptcy.  However, a borrower can shorten this time period to less than two years but not less than one year if the bankruptcy was caused by extenuating circumstances beyond their control AND the borrower has proven the ability to manager his/her financing affairs in a responsible manner.  (IMPORTANT HINT TO READER: This means you have re-established credit and have made all payments on time since the Chapter 7 bankruptcy discharge date and the events that led to the bankruptcy are not likely to happen again).

Getting an FHA loan after a Foreclosure:

The standard waiting period is three years from the property foreclosure date or deed-in-lieu of foreclosure.  However, a borrower can shorten this time period if the foreclosure was caused by extenuating circumstances beyond their control, such as illness or death of a wage earner.  (IMPORTANT HINT TO READER: Divorce or inability to sell a property due to a job relocation is not considered an extenuating circumstance).

Getting an FHA loan after a Short Sale:

There are two very separate and distinct situations when trying to obtain an FHA loan after a Short-Sale.

  1. Were you current Short Sale for the past 12 months?  If the answer is “yes” than you are immediately able to obtain FHA financing
  2. If you were delinquent or in default at the time of Short Sale than the standard waiting period of three years must be used

You will need to document that you are not trying to take advantage of declining market conditions and you were not attempting to purchase a similar/superior property within a reasonable commuting distance at a reduced price as compared to the current market value.  (IMPORTANT HINT TO READER: This can be done in a number of ways so please contact us directly to learn more). 

Joseph M. Savino is a 29-year mortgage expert with 17 years of direct underwriting experience. He is a previous owner of a two top rated correspondent mortgage companies. He is a degreed graduate of DePaul University in Chicago, IL. Currently working at American Financial Network, Inc as a Regional Manager and National Renovation Division Manager. Licensed in all states we are experts in FHA, VA, USDA, Conventional loans, Renovation loans, Reverse mortgages and Non-QM (Qualified Mortgages) including bank statement loans, asset-based loans, and stated income loans for self-employed borrowers as well as hard money loans.

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