How to Qualify for an FHA Loan after Bankruptcy

How to Qualify for an FHA Loan after Bankruptcy

For what we know of bankruptcy is the fact that it is the most painful and dreadful thing that can happen to anyone and it might mean the end of the world to many people. We do not know the fact that it can be recovered, yes the loss can be recovered and we can even own a house or two within the time gap of a year by the aid of the FHA Mortgage Loan Payment. This situation of bankruptcy can fall upon you in certain cases like a global financial crisis, long-term unemployment may be a divorce, an illness or even a lack of management in your own business. All these things are going to set the qualification criteria for the approval of your loan. Mostly in such cases, the reason does not matter as much as your knowledge about the FHA loan matters. So make sure that you have enough knowledge about the process.
 

FHA loans and bankruptcy

These are the loans basically which has been insured by the Federal Housing Administration and they are approved by the independent lenders. These loans are the only ones which have been offering you the recovery or a homeownership after going bankrupt. If you are aware of the normal Federal Housing Administration Loan guidelines then you should be aware of the fact that you can apply for a new mortgage after 2 years in case of chapter 7 bankruptcies and after one year in case of chapter 13 bankruptcies. There are some other exceptional guidelines in case of any financial issues that cause bankruptcy or in case of an incident of death or a medical emergency the rules are different.
 

The FHA has also provided you with an opportunity to ease the process for the homeowners for meeting the requirements of the loan after facing a lot of losses due to the recession season. They have done this by introducing a “back to work extenuating circumstances” which is a loan program designed especially for the loan applications which were made between August 12, 2013, and September 30, 2016. This application has brought relief to the applicants by getting them the mortgage in just one year after they have faced the chapter 7 bankruptcies.
 

To qualify for the Back to Work program, you need to:

You have to qualify for being an experienced and professional job person who has suffered a great loss or severe reduction in the income of at least 20% or more for a period of six months.
 

You need to assure the lenders that you are skilled and employed and also you can repay your Best Mortgage Professionals in Dallas (Tx).
 

You need to mention the fact that you have had amazing credit score before you suffered your great loss, with no such account of late payments or any other delinquency.
 

Show an excellent and satisfactory credit score that has been running for past 12 months where there have not been nay late payments encountered and no collection accounts except for the ones related to identify the theft.
 

Always consult a professional and have a one-on-one housing counseling session so that you can freely discuss the cause of the bankruptcy you face and also discuss the cons of the event which you have been doing to improve the status of your finances now. This is done so that you do not fall in such debts ever again.
 

These are some particular guidelines which have been set by the FHA itself, but different lenders also have their different set of guidelines which you are required to follow so that you can get the approval. The first thing you need to remember is the fact that your chances of getting an approval increase only if you show your documented income, your assets, liabilities and also your ability to repay the Home Loan Provider Company which assures them that you are qualified enough. If you have ever encountered bankrupt in your past that you will have to undertake the responsibility of proving the lender that it happened as an exception to the usual financial responsibility that you had and that it’s not a pattern. And if by chance your bankruptcy was due to any financial mismanagement then it could take a little longer to get the lender assured of the fact that you are a worthy borrower.
 

Improving your financial profile
 

Just after the event of your bankruptcy and before applying for the mortgage you should just know that this is the time when you need to take measures to ensure that you are able to establish a good credit score.
 

You will have to start saving the money so that you get enough cash for a down payment that you require and also for closing costs and cash reserves. Generally, an FHA loans ask you to pay the down payment of around 3.5 percent which is approx $7,000 on a $200,000 loan. Apart from the cash requirement, you need to make sure that you have established a definite pattern of saving money which will help you in repaying for your mortgage in future and making your application stronger.
 

It is mostly advised by many consultants that you open a credit card account if you have been avoiding any debts to follow and also if you need to improve your credit score you should make sure to take a small debt and pay for it on time. After bankruptcy, you are required to have a secured credit card and when you have it you should make sure that your payments are being reported to the credit business.
 

This is an essential thing that you need to deliver all your bills on time and in full, this is because a lender generally tends to ask for your payment histories of your bills and things. So, in that case, you should avoid taking debts so that you do not give any reason for a refusal to your application to the lender.
 

Before applying for the Pre-Approval for a Mortgage Home Loan you should acknowledge the fact that you are applying for something which you can comfortably afford and repay. You must be able to qualify for the criteria of the debt-to-income ratio of 45% which means that your minimum monthly payments which include the new mortgage equals 45% or less than your monthly gross income. Hence the lower your debt-to-income ratio is the easier it is for you to qualify for a loan.