While it can be seen as a way to get a fresh financial start, those in Louisville filing for bankruptcy may wonder how it will affect their credit, and whether they will obtain a mortgage in the future. The good news is that filing for bankruptcy does not mean a person can never obtain a mortgage again.
How long it will take before one can apply for a mortgage after filing for bankruptcy depends on the type of mortgage the person is seeking and the type of bankruptcy they filed. For example, if a person filed for Chapter 7 bankruptcy and is seeking a VA mortgage or a FHA loan, it may only take two years after the Chapter 7 discharge before a person can apply for such a mortgage. If the type of bankruptcy filed for was a Chapter 13 bankruptcy, a person may apply for these loans, if they have made at least 12 bankruptcy payments on-time and have the approval of the bankruptcy court.
Another type of mortgage a person may be interested in is a USDA rural loan. A person may apply for this type of loan three years after their Chapter 7 bankruptcy discharge. If a person had filed for Chapter 13 bankruptcy, they may be able to apply for a USDA rural loan if they have made at least 12 bankruptcy payments on-time, and they have the written approval of the bankruptcy court.
When it comes to conventional loans, it may take longer. For example, if a person filed for Chapter 7 bankruptcy, it may take four years after the date of discharge to apply for a conventional loan. If a person had filed for Chapter 13 bankruptcy, and has had their debts discharged, that person may be able to apply for a conventional mortgage two years after the date of discharge.
Obtaining a mortgage may be a major goal for those who have filed for personal bankruptcy. While filing for bankruptcy does affect a person's credit, that does not mean home ownership is out of the picture. By waiting the required amount of time and maintaining good credit, a person may be able to apply for a mortgage, even if they had filed for bankruptcy in the past.
Source: The Mortgage Reports, "Mortgage After Bankruptcy: How To Qualify Despite Your Financial Setback," Craig Berry, Dec. 13, 2016