Filing for bankruptcy can feel like a major financial setback, but it doesn’t mean homeownership is off the table forever. You can still buy a house—it just takes time, patience, and the right strategy.
The waiting period to get a mortgage depends on the type of bankruptcy you filed and the kind of loan you’re applying for. Some loans allow you to apply as soon as a year or two after discharge, while others require a longer wait.
While you’re in that waiting period, focusing on rebuilding your credit can make a big difference. A higher credit score, steady income, and a solid financial plan can help you qualify for better loan terms when you’re ready to buy.
Why Bankruptcy Makes Getting a Mortgage Harder
Filing for bankruptcy doesn’t block you from buying a house, but it does make lenders more cautious. They see it as a sign that you’ve had trouble handling debt, so they want proof that your finances are back on track before approving a loan.
Why Lenders Require a Waiting Period
Lenders use a waiting period to see whether you’ve regained stability. After a bankruptcy, they need time to evaluate whether you’ve rebuilt good habits. The timeline depends on the loan type and whether you filed Chapter 7 or Chapter 13, but the goal is always the same—to see if you’re ready for new debt.
How Bankruptcy Affects Credit and Debt Ratios
Bankruptcy usually causes a big drop in your credit score—often by 150 to 240 points. That can make it harder to qualify for a loan or get a decent rate. Rebuilding your credit score during the waiting period will make a big difference.
Your debt-to-income ratio matters too. That’s the percentage of your income that goes toward monthly debt payments. Bankruptcy can help by wiping out some debt, but if you’ve taken on new balances, your ratio could still be too high.
Loan Rules Vary by Program
Not every mortgage program handles bankruptcy the same way. FHA, VA, and USDA loans have shorter waiting periods and more flexible credit score requirements. Conventional loans typically have longer waits and expect stronger credit.
The right loan depends on your current credit score, your income, and how much time has passed since your discharge. Knowing the rules now can help you plan your next move.
Mortgage Waiting Periods After Bankruptcy
Lenders have different waiting periods for mortgages depending on whether you filed for Chapter 7 or Chapter 13 bankruptcy. These waiting periods help ensure you’ve had enough time to rebuild your financial stability before taking on a home loan.
Chapter 7 Bankruptcy
Since Chapter 7 bankruptcy eliminates most debts, lenders require a waiting period before approving a mortgage to see if you can manage your finances responsibly. The waiting period starts from the discharge date, not the filing date.
- FHA loans: 2 years
- VA loans: 2 years
- USDA loans: 3 years
- Conventional loans: 4 years
In some cases, borrowers may qualify sooner if they can prove extenuating circumstances, such as job loss, medical emergencies, or other unavoidable financial hardships.
- FHA loans: 12 months with proof of extenuating circumstances
- Conventional loans: 2 years with extenuating circumstances
Chapter 13 Bankruptcy
Chapter 13 bankruptcy involves a repayment plan rather than eliminating debt completely, so lenders are often more flexible. The waiting period depends on whether the bankruptcy was discharged or is still active.
- FHA loans: No waiting period after discharge
- VA loans: No waiting period after discharge
- USDA loans: 1-year waiting period
- Conventional loans: 4-year waiting period after discharge
If you’re still making payments under a Chapter 13 plan and want to apply for a mortgage, you’ll need approval from the bankruptcy court before taking on new debt. Lenders will also want to see a strong payment history and proof of financial stability before considering your application.
Best Mortgage Options After Bankruptcy
Choosing the right mortgage after bankruptcy depends on your financial situation, credit score, and how long you’ve waited since discharge. Some loan programs are more forgiving than others, making it easier to qualify with a lower credit score or a smaller down payment.
FHA Loans
FHA loans are one of the most accessible mortgage options for borrowers recovering from bankruptcy. Backed by the Federal Housing Administration, these loans allow lower credit scores and require a smaller down payment.
- Minimum credit score: 580 (or 500 with a higher down payment)
- Down payment: 3.5% (or 10% if credit score is below 580)
- Mortgage insurance required
- Waiting period: 2 years after Chapter 7 discharge, no waiting period after Chapter 13 discharge
Some FHA lenders offer manual underwriting, which means a loan officer reviews your financial history instead of relying solely on automated approval systems. If you’ve had stable income and responsible financial habits since bankruptcy, this approach could improve your chances of approval.
VA Loans
VA loans are available to eligible military service members, veterans, and some surviving spouses. They offer significant benefits, making them a great option for those who qualify.
- No down payment required
- No private mortgage insurance (PMI)
- Competitive interest rates
- Minimum credit score: varies by lender (typically 620)
- Waiting period: 2 years after Chapter 7 discharge, no waiting period after Chapter 13 discharge
USDA Loans
USDA loans are designed for low-to-moderate-income borrowers purchasing a home in eligible rural or suburban areas. These loans come with attractive terms but have location and income restrictions.
- No down payment required
- Lower mortgage insurance costs compared to FHA loans
- Minimum credit score: typically 640
- Waiting period: 3 years after Chapter 7 discharge, 1 year after Chapter 13 discharge
Conventional Loans
Conventional loans, which are not backed by the government, have the strictest requirements but can be a suitable option for those with a strong credit profile and a larger down payment.
- Minimum credit score: typically 620-640
- Down payment: 3% to 20%
- Private mortgage insurance required if less than 20% down
- Waiting period: 4 years after Chapter 7 discharge, 4 years after Chapter 13 discharge (or 2 years with extenuating circumstances)
Non-QM Loans (Alternative Option)
If you don’t meet conventional loan requirements, nonqualified mortgages, or non-QM loans, may be an option. These loans don’t follow traditional lending guidelines and may allow borrowers to qualify without a strict waiting period after bankruptcy. However, they typically come with higher interest rates and larger down payment requirements to offset the lender’s risk.
How to Improve Your Chances of Getting Approved
Getting approved for a mortgage after bankruptcy requires more than just waiting out the required period. Lenders want to see that you’ve rebuilt your financial stability and can manage debt responsibly. Taking the right steps now can improve your chances of qualifying for a home loan with better terms.
Rebuild Your Credit
Rebuilding your credit after bankruptcy should be one of your first financial goals. Your credit score plays a big role in whether you’ll get approved for a mortgage—and what kind of interest rate you’ll get.
Start by reviewing your credit report. You can get a free copy once a year from each of the three major credit bureaus—Experian, Equifax, and TransUnion—at AnnualCreditReport.com. Look for accounts that were discharged in bankruptcy but still show as unpaid. If you find errors, dispute them directly with the credit bureau to have them corrected.
Other smart ways to rebuild your credit include:
- Opening a secured credit card or credit builder loan – These tools can help you build a positive payment history, which is one of the biggest factors in your credit score.
- Paying all your bills on time – This includes rent, utilities, phone bills, and any current loans.
- Keeping credit card balances low – Try to use less than 30% of your available credit on each card.
If your credit report has errors or outdated accounts that should have been removed after bankruptcy, it may help to work with a credit repair company. Credit Saint is one option that can help you dispute inaccurate or negative items that are hurting your credit score.
Ready to Clean Up Your Credit Report?
Learn how credit repair professionals can assist you in disputing inaccuracies on your credit report.
Lower Your Debt-to-Income Ratio
Lenders look at your debt-to-income (DTI) ratio to determine how much of your monthly income goes toward debt payments. A lower DTI ratio makes you a more attractive borrower.
- Pay down existing debts as much as possible.
- Avoid taking on new loans or credit accounts before applying for a mortgage.
- Increase your income if possible through a higher-paying job or side income.
Save for a Larger Down Payment
A larger down payment reduces the lender’s risk and can improve your chances of approval. It may also help you secure better loan terms, such as a lower interest rate or avoiding mortgage insurance.
- Set aside money consistently to build your savings.
- Consider a gifted down payment from a family member if allowed by your loan type.
- Look into down payment assistance programs that may be available in your area.
Maintain Steady Employment and Income
Lenders want to see reliable income to ensure you can handle monthly mortgage payments. Stability in your job and earnings will strengthen your application.
- Stay with the same employer for at least two years if possible.
- Avoid gaps in employment, especially leading up to your mortgage application.
- Keep records of consistent income, including pay stubs and tax returns.
By taking these steps, you’ll show lenders that you’re financially stable and ready for homeownership, improving your chances of getting approved for a mortgage after bankruptcy.
Next Steps After Meeting Mortgage Requirements
Once you’ve reached the required waiting period and improved your financial profile, you’re ready to move forward. These steps will help you prepare for the mortgage application process and improve your odds of approval.
Get Preapproved for a Mortgage
Getting preapproved shows sellers you’re serious and gives you a clear idea of how much house you can afford. During preapproval, a lender will review your credit history, income, debts, and savings. You’ll need to provide:
- Recent pay stubs and tax returns
- A list of current debts and monthly obligations
- Proof of funds for your down payment and closing costs
Preapproval isn’t a guarantee, but it sets the stage for a smoother homebuying process.
Write a Letter of Explanation
Since bankruptcy stays on your credit report for several years, lenders may ask for an explanation. A simple letter can help fill in the blanks and ease concerns. Focus on what caused the bankruptcy, how your situation has improved, and how you’ve built financial stability since then.
Keep it short, clear, and honest. Highlight on-time payments, consistent income, and responsible use of credit.
Be Responsive to Lender Requests
Once you apply, your lender may request extra documents or clarification. Respond quickly and accurately to avoid delays. Being organized and communicative helps move things along and shows you’re prepared to take on a mortgage.
Compare Lenders That Work With Bankruptcy History
Some lenders specialize in helping borrowers with past bankruptcies. Requirements, interest rates, and flexibility can vary, so it’s smart to shop around. Get quotes from at least three lenders to compare terms and find the best fit for your situation.
If this is your first time buying a house, check out our guide for first-time homebuyers for help with choosing a loan, budgeting, and what to expect during the process.
Buying a House After Foreclosure vs. Bankruptcy
Both foreclosure and bankruptcy can make it harder to qualify for a mortgage, but foreclosure is often seen as a bigger red flag. Lenders view it as a direct failure to keep up with home loan payments, which can make them more hesitant to approve future financing.
Bankruptcy, on the other hand, is sometimes triggered by unavoidable financial hardships like medical bills or job loss, which lenders may evaluate differently.
Mortgage Eligibility After Foreclosure
The time it takes to become eligible for a home loan after foreclosure depends on the type of mortgage you’re applying for:
- Conventional loans require a seven-year waiting period from the foreclosure date. However, if you can prove extenuating circumstances, this can be shortened to three years with a 10% down payment.
- FHA loans require a three-year waiting period before you can apply again.
Foreclosure and Bankruptcy Together
If a foreclosure was included in a Chapter 7 bankruptcy, lenders typically go by the bankruptcy discharge date rather than the foreclosure date. This can work in your favor, potentially allowing you to apply for a mortgage sooner than if the foreclosure stood alone.
Lender policies vary, so it’s worth comparing options to see how different banks and mortgage companies handle these situations. Taking steps to rebuild your credit and improve your overall financial profile will increase your chances of approval when the time comes.
Final Thoughts
Buying a house after bankruptcy isn’t out of reach—it just takes time, discipline, and the right plan. If you’ve completed the waiting period and made progress on your credit, you’re already moving in the right direction.
Focus on what you can control: rebuild your credit, lower your debt, and keep your income steady. Then compare lenders who work with post-bankruptcy borrowers and choose the loan that fits your situation best.
The road to homeownership might take longer, but it’s still wide open. Keep going—and when the time’s right, you’ll be ready to make your move.
