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Steps You Can Take To Obtain an FHA Home Loan After Bankruptcy

04/27/2010

Many people are wondering if they can get a FHA Home Loan if they have gone through bankruptcy during these recent, troubled years. The short answer: it depends.

Chapter 7 Bankruptcy Guidelines

For those people that filed Chapter 7, they must be discharged a minimum of 2 years. Anyone with a discharge date less than two years ago will have to go through strenuous documentation. Some extreme situations may be considered, but be prepared to state your case. Borrowers need to provide proof of beginning new credit history with satisfactory payments. Alternatively, if the borrower has decided not to borrow again after the bankruptcy, they must outline the causes for the bankruptcy. Borrowers that can prove to a lender that they have learned their lesson and can successfully manage typical home expenses as well as a house payment will have a good chance of getting approved. These individuals should find the lowest mortgage rates so that they have a better chance of keeping up with the payments.

Chapter 13 Bankruptcy Guidelines

For those individuals that are currently participating in a Chapter 13 repayment plan, it is possible to get approved for a FHA home loan. Their first step is to ensure they have made 12 months of payments on time into the plan. Secondly, they would need to get approval from the bankruptcy court to enter into the mortgage agreement. This is a welcome relief to many people that were burned by the sub-prime mortgage scandal. A FHA loan does not have any penalties for prepayment and the rates are excellent. People who filed a chapter 13 bankruptcy within the last few years should contact a FHA lender and discuss the possibility to get approved for a home loan.

The guidelines for people involved with Consumer Credit counseling is akin to the Chapter 13 guidelines. Borrowers need to prove they have made on-time payments for at least the past 12 months and get their counseling agency's recommendation to proceed with a FHA loan after bankruptcy.

If you find yourself in any type of bankruptcy or credit counseling, it is extremely important that you make all payments to everyone on time. This will prevent any additional negative items appearing on your credit report.

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