Explore mortgage solutions available post-bankruptcy

You can get a mortgage after bankruptcy, but waiting periods apply. FHA requires 2 years after Chapter 7 discharge or 1 year into a Chapter 13 plan. Conventional loans require 4 years after Chapter 7. VA requires 2 years. During the waiting period, rebuild your credit, save for a down payment and maintain stable employment. Lenders want to see you’ve recovered financially and won’t repeat past mistakes.

Waiting Periods by Loan Type

After Chapter 7 Bankruptcy

Loan Type	Waiting Period	From When
FHA	2 years	Discharge date
VA	2 years	Discharge date
USDA	3 years	Discharge date
Conventional	4 years	Discharge date
Non-QM	1 day to 2 years	Varies by lender

After Chapter 13 Bankruptcy

Loan Type	During Plan	After Discharge
FHA	1 year (with court approval)	2 years
VA	1 year (with court approval)	2 years
USDA	1 year (with court approval)	3 years
Conventional	2 years (with court approval)	4 years

Extenuating Circumstances

Shorter waiting periods possible if:

• Bankruptcy due to circumstances beyond your control
• Medical emergency
• Job loss due to employer bankruptcy
• Death of wage earner
• Military deployment issues

Reduced periods:

• FHA: 1 year (from 2)
• Conventional: 2 years (from 4)
• Requires documentation and explanation

Chapter 7 vs Chapter 13

Chapter 7 Bankruptcy

What it is:

• Liquidation bankruptcy
• Debts discharged (eliminated)
• Assets may be sold
• Typically completed in 3-6 months

Mortgage impact:

• Longer waiting period for some loans
• Clean slate but credit damaged
• Must rebuild from scratch

Chapter 13 Bankruptcy

What it is:

• Reorganization bankruptcy
• 3-5 year repayment plan
• Keep your assets
• Debts restructured or partially paid

Mortgage impact:

• Can apply during plan (with approval)
• Court and trustee must approve new debt
• Shows ability to manage payments

Which Is Better for Future Mortgage?

Chapter 13 advantages:

• Can buy during repayment plan
• Shows payment discipline
• May be viewed more favorably

Chapter 7 advantages:

• Faster fresh start
• No ongoing payments
• Debt-free sooner

Requirements After Bankruptcy

Credit Rebuilding

During waiting period:

• Open secured credit card
• Make all payments on time
• Keep balances low
• Add installment loan if possible

Target scores:

• FHA: 580+ (3.5% down), 500-579 (10% down)
• Conventional: 620+ (higher for better rates)
• VA: 620+ (lender minimums)

Re-Established Credit

Lenders want to see:

• New credit accounts opened
• 12-24 months of on-time payments
• Mix of credit types
• Low utilization

Documentation Needed

Document	Purpose
Bankruptcy discharge papers	Proves case is closed
Court documents	Shows case details
Explanation letter	Describes circumstances
Credit report	Shows rebuilding progress
Employment verification	Stable income
Bank statements	Savings for down payment

FHA After Bankruptcy

Chapter 7 Requirements

2-year waiting period:

• Starts from discharge date
• Re-established credit required
• Standard FHA requirements apply

1-year exception (extenuating circumstances):

• Event outside your control
• Documented proof
• Credit rebuilt since bankruptcy
• Lender may have overlays

Chapter 13 Requirements

During the plan (after 1 year):

• 12 months of on-time plan payments
• Court/trustee written approval
• Meet standard FHA requirements

After discharge:

• Standard 2-year wait from discharge
• Or continue if already approved during plan

FHA Bankruptcy Tips

• FHA is most forgiving for bankruptcy
• Credit scores down to 580 accepted
• Document extenuating circumstances thoroughly
• Work with FHA-experienced lender

Conventional After Bankruptcy

Chapter 7 Requirements

4-year waiting period:

• From discharge date
• 620+ credit score
• Standard conventional requirements

2-year exception (extenuating circumstances):

• Must document circumstances
• 10% down payment required
• Strong credit since bankruptcy

Chapter 13 Requirements

During plan (2 years in):

• 2 years of on-time payments
• Court approval required
• Rare—most wait for discharge

After discharge:

• 4 years from discharge date
• Or 2 years with extenuating circumstances

Conventional After Bankruptcy Tips

• Higher credit score requirements
• PMI may be more expensive
• Strong compensating factors help
• Consider FHA then refinance later

VA After Bankruptcy

Chapter 7 Requirements

2-year waiting period:

• From discharge date
• Re-established credit
• Standard VA requirements

Chapter 13 Requirements

During plan (1 year in):

• 12 months of on-time payments
• Court/trustee approval
• VA approval of new debt

After discharge:

• 2 years from discharge
• Standard VA requirements

VA Bankruptcy Benefits

• Shorter waiting than conventional
• No down payment required
• No PMI
• More lenient guidelines overall

USDA After Bankruptcy

Chapter 7 Requirements

3-year waiting period:

• From discharge date
• Credit re-established
• Meet USDA income/location requirements

Chapter 13 Requirements

During plan (1 year in):

• 12 months satisfactory payments
• Court approval
• Automatic underwriting may not be available

After discharge:

• 3 years from discharge

Rebuilding After Bankruptcy

Year 1: Foundation

Immediately after discharge:

• Open secured credit card
• Add yourself as authorized user (family)
• Consider credit-builder loan

Goals:

• Make every payment on time
• Keep utilization under 30%
• Start saving for down payment

Year 2: Building

Credit actions:

• Apply for unsecured card (after 12 months)
• Add another trade line if possible
• Continue perfect payment history

Financial actions:

• Increase savings
• Stabilize employment
• Document income carefully

Years 3-4: Preparing

Before applying:

• Check credit reports for errors
• Calculate DTI
• Gather documentation
• Get pre-qualified

Target metrics:

• 640+ credit score (ideally 680+)
• DTI under 43%
• 3-6 months reserves
• Stable employment

The Application Process

Finding the Right Lender

Choose lenders who:

• Have experience with post-bankruptcy
• Offer manual underwriting
• Don’t have excessive overlays
• Understand extenuating circumstances

Types to consider:

• FHA specialists
• Credit union lenders
• Mortgage brokers (can shop)

Preparing Your Explanation

Write a letter explaining:

• What caused the bankruptcy
• Circumstances leading to it
• What’s different now
• Steps taken to rebuild

Keep it:

• Factual and brief
• Focused on circumstances
• Forward-looking
• Free of blame

Compensating Factors That Help

Factor	How It Helps
Large down payment	Reduces lender risk
Low DTI	Shows payment capacity
Cash reserves	Demonstrates stability
Long employment	Shows stability
No new negative credit	Proves changed behavior
Higher credit score	Indicates recovery

Multiple Bankruptcies

Impact of Multiple Filings

Second bankruptcy:

• Longer waiting periods
• More scrutiny
• Harder to document extenuating circumstances
• Pattern concerns

Typical requirements:

• FHA: 5 years after multiple Chapter 7s
• Conventional: 5-7 years
• Manual underwriting required

Overcoming Multiple Bankruptcies

• Maximum waiting period
• Significant credit rebuilding
• Large down payment
• Strong compensating factors
• Excellent explanation of circumstances

Common Mistakes

During Waiting Period

Mistakes that hurt:

• Missing any payments
• Opening too many accounts
• Carrying high balances
• Changing jobs frequently
• Not saving for down payment

During Application

Mistakes to avoid:

• Hiding bankruptcy history (lenders find it)
• Applying too early
• Not explaining circumstances
• Poor documentation
• Choosing wrong loan type

Frequently Asked Questions

How long after bankruptcy can I buy a house?

FHA: 2 years after Chapter 7 or 1 year into Chapter 13. Conventional: 4 years. VA: 2 years. USDA: 3 years. Extenuating circumstances can reduce these periods.

Will I get approved for a mortgage after bankruptcy?

Yes, if you meet the waiting period, rebuild credit and meet standard loan requirements. Thousands of people get mortgages after bankruptcy every year.

What credit score do I need after bankruptcy?

FHA accepts 580+ for 3.5% down. Conventional requires 620+. Higher scores get better rates. Most post-bankruptcy borrowers can rebuild to 620-680 within 2-3 years.

Does Chapter 13 affect me differently than Chapter 7?

Yes. Chapter 13 allows you to buy during the repayment plan (after 1 year with court approval). Chapter 7 requires waiting until after discharge. Neither is inherently “better”—depends on your situation.

How do I explain bankruptcy to a lender?

Write a brief letter explaining: what happened, why it was beyond your control (if applicable) and how your situation has changed. Be factual, not emotional. Focus on stability since the bankruptcy.

Can I buy a house while still in Chapter 13?

Yes, after 12 months of on-time plan payments, with court and trustee approval. The new mortgage must not jeopardize your ability to complete the bankruptcy plan.

Should I wait longer than required?

Sometimes. More time means more credit rebuilding, better scores, lower rates and easier approval. If you’re borderline on qualifications, waiting 6-12 extra months can significantly improve your terms.

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