Having a bankruptcy on your credit report can feel like a permanent black mark. But the truth is, it is possible to buy a home after your bankruptcy discharge. Below are details about the most common loan options, plus the waiting periods depending on the type of bankruptcy you filed. Please keep in mind that you may still have to meet the lender’s minimum credit score to qualify for the loan, in addition to the waiting period.
FHA will consider giving you a mortgage two years after your Chapter 7 discharge. However, you will have to show a positive credit history during those two years. For Chapter 13, FHA will guarantee a mortgage loan as soon as 12 months after you filed your case, assuming you made your payments on time. Additionally, if you plan to purchase a home while you’re in a Chapter 13 case, you will have to get permission from the bankruptcy court to take on new debt.
VA mortgage loans require a two-year waiting period after a Chapter 7 discharge. You will need to keep your credit clean during that waiting period because most VA lenders require a minimum credit score. As for Chapter 13 bankruptcy, you may be eligible for a VA loan just 12 months removed from the filing date.
If the Chapter 7 bankruptcy were due to your financial mismanagement, you would have to wait 48 months, but if the bankruptcy were out of your control, you’d be eligible after 24 months. For a Chapter 13 bankruptcy, you must wait 24 months after discharge. If the court dismisses your case without a discharge, the waiting period increases to 48 months. However, if you can show that you filed the Chapter 13 case under extenuating circumstances, you’ll only have to wait 24 months.
Keep in mind that every bankruptcy situation is different. A bankruptcy will significantly lower your credit score and ultimately signal creditors that you are a lending risk. And although a Chapter 7 bankruptcy remains on your credit report for up to 10 years and Chapter 13 remains for up to seven years, you can still seek professional guidance before obtaining a mortgage.
If you’re trying to get a mortgage after bankruptcy, the first thing you’ll need to do is get your credit score back on track. There’s no quick fix for rebuilding your credit after a bankruptcy, but Legacy Credits can help.