It goes without saying that mortgage debt is one of the primary problems for people living in Las Vegas. The question many ask themselves or their Las Vegas bankruptcy lawyer is, How can I buy a home after bankruptcy? One option for debtors is obtaining a mortgage guarantee through the Federal Housing Administration (FHA), which is a unit of the U.S. Department of Housing and Urban Development. The FHA doesn’t make loans directly, but it will guarantee a mortgage by another lender if the buyer meets certain requirements. Those requirements are stricter for buyers who have discharged debt in bankruptcy, but they aren’t at all insurmountable. Here are the requirements for obtaining a post-bankruptcy FHA loan guarantee:
- An FHA loan is allowed after no fewer than two years after the buyer’s debt is discharged in a chapter 7. Importantly, it’s not the filing date that matters, but the discharge date. Buyers must also demonstrate a documented ability to manage his or her financial affairs.
- Buyers who can demonstrate that their bankruptcies were caused by extenuating circumstances beyond their control need only wait 12 months to apply for an FHA loan guarantee if they can exhibit a documented ability to manage their financial affairs responsibly.
- Chapter 7 debtors must have reestablished that they have good credit or that they aren’t going to incur new debts. This can include a good credit score from one of the three reporting agencies.
- Buyers must have repaid any tax liens or are paying them in a repayment plan on file with the IRS.
- There have been no fewer than three years since the buyer’s last foreclosure or offer to exchange the property’s deed in lieu of foreclosure.
- The debtor paid all judgments facing him or her.
- Chapter 13 debtors can obtain a guarantee while still in their repayment plans, but one year’s worth of payments must have been made and verified on the plan. The buyer must obtain a letter from the trustee stating the dollar amount that the debtor can borrow to buy a new home. Finally, the buyer must submit a detailed explanation of the bankruptcy for the FHA, have good credit, and gainful employment.
FHA loans are designed to give poorer people a leg up in their lives so that they can afford to buy real estate and live the American Dream. Talk to your Las Vegas bankruptcy lawyer to help strategize your bankruptcy and even your life afterwards.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.