Question 23
Domain 4: Mortgage Products and Program GuidelinesA borrower with a Chapter 7 bankruptcy wants to obtain an FHA loan. How long must they wait after discharge?
Correct answer: B
Explanation
FHA underwriting requires a waiting period after a Chapter 7 bankruptcy discharge before a new mortgage can be approved. The standard rule is a "2-year" wait after discharge, which allows time to reestablish credit and demonstrate financial stability.
Why each option is right or wrong
A. 1 year
B. 2 years
Under FHA underwriting, a Chapter 7 bankruptcy generally requires a minimum 2-year waiting period measured from the discharge date before the borrower is eligible for a new FHA-insured mortgage. This is the standard rule applied by FHA lenders to confirm the bankruptcy has been fully resolved and that the borrower has had sufficient time to reestablish credit and stable payment history.
C. 4 years
D. 7 years