Understandably, many adults in Maryland want to become homeowners. However, life can sometimes be full of unwanted financial-related surprises. One of these situations happens when someone must file for bankruptcy. After completing this process, many people wonder if they’re able to qualify for a home loan.
Home loans after bankruptcy
Fortunately, the good news is that people can qualify for and obtain a home loan after filing for bankruptcy. Typically, most people who file for bankruptcy choose Chapter 7 or Chapter 13 bankruptcy.
Completing a waiting period
While homeownership is possible after filing for personal bankruptcy, most home loan programs require a waiting period. This period depends on what type of bankruptcy you filed for and what home loan you want to obtain.
An FHA loan requires a two-year waiting period after filing for Chapter 7 bankruptcy. If you filed for Chapter 13 bankruptcy, an FHA loan only has a one-year waiting period. The same waiting periods apply for obtaining a VA loan after a Chapter 7 or Chapter 13 bankruptcy.
Obtaining a post-bankruptcy conventional loan
People who file for bankruptcy may also potentially secure a home loan by choosing one that’s non-government funded. These loan types are otherwise known as conventional loans.
If you filed for Chapter 13 bankruptcy, a conventional loan requires a two-year waiting period after your bankruptcy’s discharge date and four years after its dismissal date. After filing for Chapter 7 bankruptcy, you must complete a four-year waiting period or a two-year discharge date if extenuating circumstances exist.
While you wait, keeping your debt low and saving for a down payment can also strengthen your ability to qualify for a loan. You can also make other preparations, such as saving for other expenses like an emergency fund.