Getting a mortgage after bankruptcy

In order to get a mortgage after filing for bankruptcy, you'll have to wait anywhere from a year to five years after your case is discharged.

Pat Howard 1600


Pat Howard

Pat Howard

Senior Editor & Licensed Home Insurance Expert

Pat Howard is a senior editor and licensed home insurance agent at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Published June 4, 2019 | 4 min read

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Key Takeaways

  • Bankruptcy gives you the opportunity to wipe yourself clean of debt, but it also lowers your credit score drastically

  • Lenders typically require a waiting period after your bankruptcy discharge before granting you a home loan

  • You can get certain types of mortgages, like FHA and VA loans, after one year of your bankruptcy discharge has elapsed

If you’re having serious financial problems and struggling to pay back debt to creditors, you have the option of filing for bankruptcy to cancel your debt and get a fresh start. Bankruptcy can help get your life back to normal, but it also leaves a giant mark on your credit record and can make it hard for you to get a mortgage.

But getting a mortgage after bankruptcy is possible. In fact, depending on the severity of your bankruptcy case, the circumstances of the case, and the type of home loan you’re applying for, you may be able to get a mortgage one year after your bankruptcy was discharged (the date your bankruptcy case was officially closed).

However, just because you become eligible to apply for a mortgage doesn’t necessarily mean you should.

Your credit score is generally at its lowest in the aftermath of bankruptcy, and applying for a mortgage with bad credit means you’ll get high interest rates and a potentially unaffordable mortgage. Give yourself as much time as possible to build up your credit, accumulate savings for a sizeable down payment, and land a lower interest rate.

How bankruptcy can affect your ability to get a mortgage

A bankruptcy case typically takes around 4 to 6 months to complete. If you file Chapter 7 bankruptcy, your debt is effectively wiped out after your case is closed, but it stays on your credit report for up to 10 years. After Chapter 13 bankruptcy — a less severe form of bankruptcy — you repay some or all of your debts over a period of time, and it typically stays on your credit report for up to seven years.

If you’re experiencing financial hardship and your only option is to liquidate some or all of your debt, bankruptcy is an effective way out, but it can do a number on your credit score. That can make it difficult in the near-term to do anything that involves credit checks, such as getting a credit card, renting an apartment, buying a car, or buying a home.

But once your debt is clear, the waiting period after bankruptcy discharge is over, and you begin the long road of building up your credit score, you can begin formulating a plan to get a mortgage on a home.

(Keep in mind that you may need a while to rebuild that credit — bankruptcy can lower your credit score by as much as 200 points; getting a secured credit card and making your monthly payments in full every month is an effective way to bump it back up.)

How soon can you qualify for a mortgage after bankruptcy?

Once your bankruptcy case is closed and your debt is either liquidated or you begin to repay some of the debt, you’ll have what is referred to as a waiting period before you’ll be eligible to get a mortgage.

The length of your waiting period depends on the type of bankruptcy and the kind of mortgage you’re applying for.

Most conventional, or private loans, are regulated by government enterprises Fannie Mae and Freddie Mac, and both Fannie and Freddie have eligibility requirements for individuals who recently filed for bankruptcy. Similarly, low credit/low down payment loans insured through the FHA, VA, and USDA have their own individual eligibility requirements.

If you had to foreclose on your home as part of your bankruptcy settlement, you’ll have to wait even longer to get a mortgage.

The table below shows the waiting periods for each loan-type in the event you file for Chapter 7 bankruptcy, Chapter 13 bankruptcy, or your home is foreclosed.

Getting a mortgage afterConventional Fannie Mae LoanConventional Freddie Mac LoanFHA LoanVA LoanUSDA Loan
Chapter 7 bankruptcy4 years from discharge date4 years from discharge date2 years from discharge date2 years from discharge date3 years from discharge date
Chapter 13 bankruptcy2 years from discharge date2 years from discharge date1 year of satisfactory payments must elapse; must receive permission from court1 year of satisfactory payments must elapse; must receive permission from court1 year of satisfactory payments must elapse and payment performance must be satisfactory; must receive permission from court
Foreclosure7 years from completion date7 years from completion date3 years from completion date2 years from completion date3 years from completion date

What if home foreclosure happens during the bankruptcy case?

Something to keep in mind with home foreclosure is you may qualify for a shorter waiting period — two to four years instead of seven — if the foreclosure was included in your bankruptcy. It ultimately depends on whether or not the home’s foreclosure is tied to your bankruptcy.

According to Fannie Mae:

If a mortgage debt was discharged through a bankruptcy, the bankruptcy waiting periods may be applied if the lender obtains the appropriate documentation to verify that the mortgage obligation was discharged in the bankruptcy. Otherwise, the greater of the applicable bankruptcy or foreclosure waiting periods must be applied.

That means if you can adequately prove that the home was surrendered as a part of the bankruptcy, your waiting period will be cut to two or four years under conventional loan terms. If the foreclosure was separate from the reason for your bankruptcy and the cases were discharged separately, you’ll have to wait the greater of the waiting periods (7 years) before you’ll be able to get a mortgage.

What if you’ve filed for bankruptcy multiple times?

If you’ve filed for bankruptcy more than once in the last seven years, Fannie Mae and Freddie Mac require that borrowers wait five years from the most recent discharge date instead of two or four years. The waiting period for FHA, VA, and USDA loans are simply reset after the most recent discharge.

Getting a mortgage after a bankruptcy with extenuating circumstances

If your bankruptcy or foreclosure was a result of extenuating circumstances — like the death of a spouse or primary breadwinner, a job loss, or a natural disaster that caused a total loss of your home — your bankruptcy may qualify as extenuating circumstances depending on your lender.

If your lender approves of your extenuating circumstances, they may shorten your waiting period to as recent as one year of the bankruptcy discharge, depending on the type of loan you’re applying for. The following table shows the potentially shortened waiting times for conventional loans.

Getting a mortgage afterWaiting period with extenuating circumstances
Chapter 7 bankruptcy2 years
Chapter 13 bankruptcy2 years
Multiple bankruptcy filings3 years from most recent bankruptcy discharge
Foreclosure3 years