When you can apply for a mortgage after bankruptcy

Texas residents who have filed bankruptcy or experienced a foreclosure can get new mortgages again but may be subject to certain wait periods.

Residents in Sherman and other cities in Texas who have filed bankruptcy or experienced a foreclosure in the past several years may often wonder if they will be able to buy a house in the future. While certainly these actions can hurt a person's credit, they by no means eliminate the potential for home ownership forever.

Different lenders will have different requirements when it comes to approving mortgages. The Federal Housing Authority and Fannie Mae, for example, each outline unique criteria for people wishing to obtain a loan backed by their organizations. Both require that people with prior bankruptcies or foreclosures wait a designated amount of time before new mortgages can be approved.

FHA loan waiting times

The FHA refers to its waiting times as "seasoning" periods. In general, consumers who have previously filed Chapter 7 bankruptcies should wait two years before seeking an FHA mortgage. Some banks may even require a three-year waiting period. The seasoning period begins at the date that the bankruptcy was discharged, not the date on which it was originally filed.

Consumers who are in active Chapter 13 bankruptcies may seek a new mortgage even before their bankruptcies are discharged. Doing this will require that they are current with all Chapter 13 payments, can show appropriate employment history and have good credit overall apart from the bankruptcy. Consumers will also be required to provide a written account explaining the reason for their bankruptcy.

Fannie Mae loan waiting times

Fannie Mae separates its waiting times based upon the type of action that a consumer has experienced. People with pre-foreclosures or deed-in-lieu of foreclosures on record will generally need to wait four years before applying for a new mortgage. Some extenuating circumstances can bring that wait time down to only two years.

Consumers with a foreclosure will need to wait seven years to apply for a mortgage or three years if they meet the requirements for extenuating circumstances. People who meet this requirement may also be bound by other limitations regarding the amount that they can borrow relative to the value of a home and any cash-out for refinancing.

If a Chapter 13 has been filed, the wait period is two years for anyone with extenuating circumstances. For other persons, it is four years from the dismissal or two years from the discharge. Consumers who have filed a Chapter 7 may apply for a new mortgage after four years or two years if their situation falls under the category of extenuating circumstances.

Getting legal input can help

Even before a bankruptcy is filed, talking with an attorney to understand the long term implications of a filing is recommended. Knowing ahead of time what to expect can help people make the right choice when seeking an appropriate debt-relief solution.