FHA Bankruptcy Guidelines

bankruptcy is not an end-all for FHA eligibility.

Acquiring a mortgage after filing for bankruptcy is a daunting task, as this major financial misstep remains on your credit record for seven years, causing your score to creep back to normal. The Federal Housing Administration insures mortgages despite bankruptcy, with seasoning requirements.

Time Frame

Chapter 7 bankruptcy liquidates all of your debts, while a Chapter 13 case requires repayment over a certain amount of time. Neither bankruptcy disqualifies you from obtaining FHA financing. You must wait at least two years after a Chapter 7 or 13 is discharged before you can qualify, according to the FHA Handbook.

Potential

FHA makes an exception to the two-year waiting period for Chapter 7 filings. If you had to file due to extenuating circumstances beyond your control, such as a medical condition or physical disability that kept you out of work, you may qualify after a 12-month waiting period post discharge. FHA requires you to document responsible financial management in the interim.

Considerations

You must obtain court permission to enter into the mortgage transaction after a Chapter 13, according to the FHA Handbook. Chapter 7 filings have no such requirement, although you must have reestablished good credit without incurring new credit obligations.

References

• FHA Outreach: FHA Handbook: Guidelines for Credit Report Review: Chapter 7
• FHA Outreach: FHA Handbook: Guidelines for Credit Report Review: Chapter 13