Getting an FHA Loan After Bankruptcy

Bankruptcy Attorney

FHA loans are government-backed mortgages, insured by the Federal Housing Administration (FHA). Millions of Americans are attracted to these form of financing due to the less stringent qualifications than some mortgages, in addition to the relatively modest interest rate available. Many clients who visit bankruptcy law firms are concerned that they won’t be able to obtain lending for necessary housing if they can’t secure an FHA loan after bankruptcy. There are some guidelines governing applying for and landing an FHA loan, but it’s not impossible to obtain a mortgage relatively in a relatively brief amount of time after being discharged from bankruptcy.

Your Credit After Bankruptcy

Let’s say you have a FICO score in the mid 600’s to 680’s, you could expect you scored to drop 130 to 150 points after filing a bankruptcy. Your FICO score will no longer drop month over month due to missed payments or high balances. In fact, bankruptcy can not only stop collection activities but can wipe the debt attached to the attempts out, giving your credit a blank slate to begin rebuilding. Bankruptcy offers you the ability to arrange your debt and secured property so that you can get back to making regular payments by eliminating burdensome debt. Making regular mortgage and auto loan lenders that report regularly to any of the three major credit bureaus will help increase your credit score quickly after bankruptcy. Of course, there are additional steps, such as creating and maintaining a keen budget that will also help contribute to your financial comeback.

FHA Loans After Bankruptcy

A few common questions that Ohio bankruptcy attorneys hear regarding FHA loans have to do with the waiting period for FHA loans after filing bankruptcy and when the actual waiting period begins. Individuals who have filed Chapter 13 bankruptcy can be approved for an FHA loan while still in the bankruptcy repayment period, assuming that all payments to the Chapter 13 reorganization plan have been made on time for a continuous twelve months. In order to do so, the bankruptcy trustee for your Chapter 13 bankruptcy case must provide written approval. In addition, the FHA will require you to explain your bankruptcy in writing: why you had to file, what it solved, and how you are doing now.

Alternatively, if you have filed a Chapter 7 bankruptcy, the FHA waiting period is 2 years from the time your case was discharged before applying for an FHA loan. During these 24 months, it’s a good idea to work hard on improving your credit to increase your chances of obtaining a housing loan. As a bonus, if you can increase your score enough, you open your financing options to lower interest loans.


Even with a credit score of 500, you can still qualify for an FHA loan, although you will have to come up with a 10% down payment for the home loan. Filing bankruptcy offers you the ability to shed burdensome debt and start with a clean slate on which to build your FICO score up. By making a budget and sticking to it, avoiding taking on new debt (which you can’t do without bankruptcy court permission in a Chapter 13 bankruptcy anyway), and make all your payments in a timely manner, it is entirely possible to get an FHA loan after bankruptcy. Feel free to contact your Dayton Ohio bankruptcy attorney for questions about obtaining new loans during or after bankruptcy.

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