FHA Loan After Bankruptcy: A Complete Guide

Whether youre a first-time homebuyer, moving to a new home, or want to refinance your existing conventional or FHA mortgage, the FHA loan program will let you purchase a home with a low down payment and flexible guidelines.580 Credit Score- and only -3.5% Down RELATED ARTICLES

FHA loan limits were established to define how much you can borrow for a HUD-backed mortgage. Each state has different limits, so be sure to look up your state to understand what is available for your FHA home loan.

For , the FHA floor was set at $498,257 for single-family home loans. This minimum lending amount covers most U.S. counties. The FHA ceiling represents the maximum loan amount and is illustrated in the table below.

Also for 2024, the FHA ceiling was set at $1,149,825 for single-family home loans. This represents the highest amount that a borrower can get through the FHA loan program. It applies to high cost areas in the United States and is illustrated in the table below.

Paying the upfront costs of buying a new home can be challenging. To help overcome this hurdle, many local and state agencies offer down payment assistance in the form of grants or second mortgages.

Filing for bankruptcy can be a difficult and emotional process. It provides relief from overwhelming debts, but it also negatively impacts your finances and credit for years.

Many homeowners wonder if they can qualify for an FHA mortgage loan soon after bankruptcy. The good news is that yes, it is possible!

This comprehensive guide covers everything you need to know about getting approved for an FHA loan after bankruptcy, We’ll explain

The different types of bankruptcy
FHA loan requirements after bankruptcy
Tips for improving your chances
The timeline for eligibility
Alternatives if you don’t qualify

Let’s get started!

Overview of Bankruptcy Types

There are two main types of bankruptcy filings – Chapter 7 and Chapter 13. Here is a quick overview of how they work

Chapter 7 Bankruptcy

Liquidation bankruptcy
Discharge unsecured debts like credit cards and medical bills
Assets above exemptions may be sold to pay creditors
Get a “fresh start” but damages credit

Chapter 13 Bankruptcy

Reorganization bankruptcy
Repay debts through 3-5 year court-ordered payment plan
Keep all assets
Must have regular income to make payments
Less impact on credit than Chapter 7

The type of bankruptcy you file will determine the waiting period for an FHA loan.

FHA Loan Requirements After Bankruptcy

FHA has specific requirements for how long you must wait after bankruptcy to qualify for one of its low down payment government-backed mortgages.

For Chapter 7:

Wait at least 2 years from discharge date
Reestablish good credit after bankruptcy
Proof of extenuating circumstances may allow earlier approval

For Chapter 13:

Wait at least 1 year from discharge date
Make all payments on time under repayment plan
Get written permission from court to take on mortgage

Meeting these requirements is the first step to FHA loan eligibility after bankruptcy. However, the FHA has additional underwriting guidelines you must meet as well:

Minimum credit score of 580
Debt-to-income ratio below 50%
Sufficient income and assets
Attend housing counseling class

Rebuilding your credit and finances will help satisfy these requirements.

Tips for Improving Your Chances

Here are some tips for boosting your chances of getting approved for an FHA loan after bankruptcy:

Wait the full 2 years after Chapter 7 discharge before applying
Successfully complete Chapter 13 plan before applying
Avoid taking on new debt after bankruptcy
Make all debt and bill payments on time
Lower credit utilization below 30%
Build positive payment history
Save for down payment and closing costs
Complete housing counseling prior to applying

Meeting FHA guidelines and demonstrating responsible money management will go a long way towards getting approved.

Timeline for FHA Loan Eligibility After Bankruptcy

Here is a quick overview of how long you typically need to wait to qualify for an FHA mortgage after bankruptcy:

1 year – Earliest approval after Chapter 13
2 years – Earliest approval after Chapter 7
3-6 years – Improved approval odds after rebuilding credit

The most important thing is showing you’ve established better money habits since bankruptcy. Waiting longer can help with that.

Alternatives if You Don’t Qualify for FHA Loan

If you don’t meet eligibility requirements for an FHA loan, here are some alternative mortgage options to consider:

Conventional 97 Loan – 3% down payment with flexible credit guidelines
VA Loan – 100% financing for veterans and service members
USDA Loan – 100% financing for low-income borrowers in rural areas
Portfolio Loans – Non-conforming mortgages held by lenders
FHA Streamline Refinance – Refinance existing FHA loan into lower rate
Waiting and Reapplying – Continue rebuilding credit and reapply in 1-2 years

These options provide more possibilities for getting approved if you don’t qualify for an FHA loan immediately after bankruptcy.

The Bottom Line

Filing bankruptcy can make getting approved for a mortgage more challenging. However, it is possible to get an FHA loan within 1-2 years if you meet all their requirements.

Following FHA guidelines, rebuilding your credit responsibly, and looking at alternative mortgage products will help increase your chances after bankruptcy. Be patient, as it may take a few years to improve your situation enough to qualify for financing.

Consult with a bankruptcy attorney and mortgage professional to understand the waiting periods, what you can do to better your chances, and find lending solutions that fit your unique situation. With time and a prudent approach, homeowners can absolutely bounce back from bankruptcy and achieve the dream of homeownership again.

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Single	Duplex	Tri-plex	Four-plex
FHA Limits (low cost areas)
$498,257	$637,950	$771,125	$958,350

Single	Duplex	Tri-plex	Four-plex
FHA Limits (high cost areas)
$1,149,825	$1,472,250	$1,779,525	$2,211,600

Paying the upfront costs of buying a new home can be challenging. To help overcome this hurdle, many local and state agencies offer down payment assistance in the form of grants or second mortgages.

FHA Loan Programs for 2024

The most recognized 3.5% down payment mortgage in the country. Affordable payments w/good credit.

How to qualify for a FHA loan after bankruptcy.

FAQ

How many years after bankruptcy can you get a home loan?

Bankruptcy Type	Conventional Loans	FHA or VA Loans
Chapter 13	Two years from discharge date or four years from dismissal	One year from discharge date
Chapter 7	Four years from discharge date	Two years from discharge date

What is the waiting period for a mortgage after bankruptcy?

The waiting period for a conventional loan after bankruptcy is: Chapter 7 – Four years after discharge date. Chapter 13 – Two years. If the case is dismissed, which happens when the person filing for bankruptcy doesn’t follow the plan, it’s four years.

How soon can you apply for a loan after bankruptcy?

You’ll have to wait at least until all your debts have been repaid according to your Chapter 13 schedule, which will be either three or five years. However, bankruptcy can stay on your credit report for up to 10 years, which may make it difficult to get a loan with favorable terms.

Can you get an FHA loan after a foreclosure?

To qualify for a loan that the Federal Housing Administration (FHA) insures, you typically must wait at least three years after a foreclosure. The three-year clock starts ticking when the foreclosure case has ended, usually from the date that the home’s title transferred as a result of the foreclosure.

How long after bankruptcy can I get a loan?

You may be able to get an FHA loan within 12 months of filing for bankruptcy if you qualify according to FHA post-hardship guidelines. The FHA has committed to helping borrowers with extenuating financial circumstances, and will allow lenders who choose to participate to make an FHA loan within one year of an ‘Economic Event’.

Can I get an FHA loan after a chapter 13 bankruptcy?

According to FHA loan rules in HUD 4000.1, a Borrower is not disqualified from obtaining an FHA-insured Mortgage if at least 12 months of the pay-out period under the Chapter 13 bankruptcy has elapsed.

Can I get an FHA loan after a Chapter 7 bankruptcy?

You can get an FHA loan two years after filing for Chapter 7 bankruptcy, which is a type where you discharge your debts and do not pay them back if you qualify.

Can I get a new FHA mortgage after bankruptcy?

If you’ve gone through a foreclosure, you might qualify for a new FHA-insured mortgage loan after waiting three years. After a Chapter 7 bankruptcy, the waiting period is generally two years. If you file for Chapter 13 bankruptcy, you might be able to get a new FHA-insured mortgage before you complete the plan.