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How Soon Can You Buy a Home After Filing Bankruptcy in California?

While many people are under the impression that they cannot buy a home after filing for bankruptcy in California, this is far from the truth. Depending on the chapter of bankruptcy you filed and the type of mortgage you apply for, you may qualify for a California home loan in as little as one years.

What Is the Waiting Time After Filing Chapter 7 Bankruptcy?

The waiting time before you can obtain financing for a home after filing Chapter 7 will vary based on the type of loan you pursue. Unfortunately, you won’t be able to qualify for conventional loans in California for at least 4 years from the date your case is discharged.

However, you only need to wait 2 years after your bankruptcy to secure Federal Housing Administration (FHA) or Veterans Administration (VA) loans and 3 years for a United States Department of Agriculture (USDA) loan.

How Soon Can You Buy a Home After Filing Chapter 13 Bankruptcy?

The length of time you must wait after your Chapter 13 before you can buy a home using a conventional loan depends on how your case is handled in court:

  • If your case is dismissed, the waiting period is at least 4 years from the date of the dismissal before you can be approved.
  • If your debt is discharged, you’ll have to wait 4 years from the date you filed your case.

On the other hand, the waiting period for FHA, VA, and USDA loans in California is only 1 year.

What Do You Need To Know Before Getting a Loan After Bankruptcy?

If the waiting period has expired and you want to purchase a home in California, you should get preapproved for a mortgage. A preapproval letter is issued from a lender and tells you how much money you are qualified to receive. In addition to letting you establish a budget for your property search, a preapproval lets sellers know that you can secure the financing needed to buy the home.

When you apply for a preapproval, you will have to offer the lender some documentation that proves your assets and income. You will likely have to provide:

  • Your last two W-2s
  • Your bank statements
  • Your most recent pay stubs

Your credit score is also an important factor in qualifying for a preapproval. If your credit score is under 580, you should work on improving your score before applying for pre approval.

If you’re considering filing for bankruptcy in California and are concerned about your ability to buy real estate afterward, a knowledgeable DebtStoppers attorney can answer your questions.