June 5, 2013
A reader asks, “I have a Chapter 7 bankruptcy a yr ago w/a score 589 and as a veteran honorable recieving SS benefit income of $735.00/month, and together with my wife, employed 5/yrs with an income is $1,920.00 a month, with a score 580. We have been renting for 5yrs without missing or late payments with the same landlord in Fla. Can we qualify as a first time home buyer?”
There are two basic issues related to this reader question. The reader asks if there’s a chance to qualify “as a first time home buyer”.
The FHA does not, contrary to popular belief, require applicants to be first time home buyers in order to get an FHA home loan. By the same logic, there is no benefit or preference given to first-time home buyers under the FHA loan program in general.
That’s not to say you can’t find state, local or even bank-sponsored programs aimed at first time home buyers, but the FHA loan program in general is open to all qualified applicants.
The reader asks if it’s possible to get an FHA home after being in a Chapter 7 bankruptcy situation for one year. FHA loan rules state the following about Chapter 7 bankruptcy:
“A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy.”
FHA requirements state there’s a two year waiting period as mentioned above. Borrowers who have not met this two-year requirement will be required to wait out the minimum time, but it’s important to know that many lenders may have longer waiting times than the FHA minimum.
This is perfectly acceptable and may require the borrower to shop around for a lender willing to work with the borrower on a time frame closer to the FHA minimum. For more information on FHA bankruptcy rules, contact the FHA directly by calling 1-800-CALL FHA.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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