How Soon Can I Get A Mortgage After Bankruptcy?

how soon2-Year Waiting Period For Mortgage Debt Discharged In Bankruptcy

Many clients want to know if they will ever qualify for a home loan after filing bankruptcy.  They got their first home, and due to a change in their situation, they lost it in a foreclosure proceeding.  They are worried that they will never be able to get a home loan again.

According to Fannie Mae, there is only a two-year waiting period if you had mortgage debt discharged in a bankruptcy case.

Read about it from their announcement:

This completely destroys the myth that filing bankruptcy means you will never get a home loan.  

The bankruptcy case does the “heavy lifting” in getting you out of debt problem; you still have to get yourself out of your “income problem” that may have led to the bankruptcy case.  There is still a debt-to-income test that you will have to pass in order to qualify for a home loan.  Your debt will not be a problem, because the bankruptcy ended those problems.  Instead, the income part of the debt-to-income ratio needs to be your focus.  You will have a much better chance of qualifying for a home loan if you carefully increase your credit worthiness by increasing your income.

Here are some questions that you should be asking:

  1. What is the best way for me to get debt free?
  2. How long is it going to take me to get debt free?
  3. After I get debt free, how long will it take me to save a $1,000 “Emergency Fund” so that I can avoid debt problems in the event I run into some unforeseen expenses?
  4. After I have created an “Emergency Fund,” how long will it take for me to save enough for a down payment for the house?
  5. What are some ways that I can increase my income so that I can afford the new house payment?

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