Qualifying for a Mortgage after a Bankruptcy is possible but requires borrowers to have re-established positive credit.  Different types of mortgages have some differences in guidelines. 

Here is a breakdown of the rules by financing type...

Conventional :  Chapter 7 requires 4 years since discharge.  This may be reduced to 2 years if Extenuating Circumstances can be documented.   Chapter 13 requires 2 years since successful completion and discharge.  If Chapter 13 was not completed there is a 4 year requirement from the dismissal date.  This may be reduced to 2 years with documented Extenuating Circumstances.  If a borrower has had more the one bankruptcy within a 7 year period then a 5 year period is required from discharge or dismissal.  This may be reduced to 3 years with documented Extenuating Circumstances. 

FHA :  2 years since Chapter 7 discharge, one year possible if documented Extenuated Circumstances;  1 year since Chapter 13 with on time payments and court approval

VA :  2 years since Chapter 7 discharge, one year possible if documented Extenuated Circumstances;  1 year since Chapter 13 with on time payments and court approval

USDA :  3 years since Chapter 7 discharge;  1 year since Chapter 13 with on time payments and court approval.  USDA will also consider applicants who have completed these time frames but have documented Extenuating Circumstances.

So what are Extenuating Circumstances?

Extenuating Circumstances are defined as events that are beyond the borrower’s control that result in a significant, sudden and prolonged decrease in income or a sudden and drastic increase in financial obligations.  Any borrower hoping to be granted Extenuating Circumstances must document their situation thoroughly with copies of divorce decree, medical bills, notice of job layoff, job severance papers, etc.  These exceptions, especially for divorce, are not always granted but the better the borrower documents and explains their basis for an exception, the better their chance of having the exception granted.

Qualifying for a Mortgage after Bankruptcy is possible as long as the borrower has met the minimum time requirements for bankruptcy and has re-established their credit with a qualifying credit score.  If you have any questions regarding qualifying for a mortgage in Pennsylvania, feel free to contact me with any questions.