Or, call me at: One question I’ve often received has to do with how long you’ll need to wait after a bankruptcy before you can purchase a new home. First, it’s important to understand that there isn’t any restriction on buying a home after bankruptcy, just on getting a home loan after a bankruptcy. You certainly are free to purchase a home, you’ll just need to find a very flexible lender (which could be tough) or purchase with cash or some form of seller financing. Getting a loan through the traditional sources likely will be difficult because the majority of available financing right now is subject to either Fannie Mae or FHA guidelines, both of which restrict lending to homeowners with bankruptcies in their credit history.
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The following is a general rundown of the bankruptcy waiting period guidelines for Fannie Mae and FHA. Note that these guidelines are subject to change at any time and often have more detailed nuances than what is addressed here. It’s important to consult with a qualified mortgage professional for more specific information about your particular situation.
Fannie Mae Bankruptcy Waiting Period
- Chapter 7: The standard waiting period to obtain a new Fannie Mae loan after a Chapter 7 bankruptcy (debt liquidation) is four years and is measured from the discharge or dismissal date of the bankruptcy action. If you can document that significant extenuating circumstances beyond your control led to the bankruptcy, the waiting period could be reduced to as little as two years.
- Chapter 13: The waiting period for a Chapter 13 bankruptcy (debt repayment plan) depends on whether the bankruptcy was discharged (completed) or dismissed (not completed). If your Chapter 13 was discharged, your waiting period is two years. If it was dismissed, the wait will be four years. Fannie Mae guidelines allow for a reduction of the waiting period for dismissals to two years if significant extenuating circumstances beyond your control led to the bankruptcy and can be documented. There is no waiting period reduction for discharges.
- Multiple bankruptcies: If you have more than one bankruptcy on your credit report in the past 7 years, your waiting period is 5 years from the most recent dismissal or discharge date. The waiting period may be reduced to 3 years if extenuating circumstances apply and can be documented.
FHA Insured Bankruptcy Waiting Period
- Chapter 7: The minimum waiting period for an FHA insured mortgage is 2 years since the discharge date of the Chapter 7 bankruptcy as long as you have reestablished your credit and have not taken on new credit obligations. Like Fannie Mae, however, the wait may be reduced to twelve months if significant extenuating circumstances can be documented and you have since shown that you can manage your finances well.
- Chapter 13: It’s possible to qualify for an FHA insured mortgage while in Chapter 13 as long as at least one year has elapsed since entering into the repayment plan, payments have been paid on time, and the bankruptcy court has given its permission for you to enter into a mortgage transaction. If your Chapter 13 has already been discharged, the standard waiting period is two years, but it’s possible it could be reduced or eliminated if you otherwise have strong qualifications.
It’s Important to Work on Rebuilding Your Credit Right Away
If you’ve recently been through a bankruptcy, it’s important that you begin taking steps to rebuild your credit right away. Even if you had all your debt eliminated through the bankruptcy, there often are lingering issues that remain on your credit report, such as collections or charge-offs. Just because a debt was eliminated through bankruptcy doesn’t guarantee that the account will be updated accordingly on your credit report. The sooner you work to rebuild your credit, the more easily you’ll be able to qualify for new mortgage financing once the waiting periods are over.
Conclusion
This is just a very general overview and other guideline nuances can apply. For more detailed information about your particular situation, it’s important to consult with a qualified mortgage professional. It’s also important to note that though these are the standard guidelines for Fannie Mae and FHA, lenders that underwrite to Fannie Mae and FHA guidelines might add their own more restrictive guideline overlays.
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Thanks for sharing, I wasn’t knowledgeable of any of this. A homebuyer doesn’t have to wait as long as I thought they would have to.
Thanks for the article and hope to read from you again. Great job MbM.
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If a borrower had a chapter 13 dismissed in September of 2010 will he be eligible for a FHA insured purchase loan?
FHA guidelines don’t specifically address a waiting period for dismissals, but I imagine that it is at least as much as the waiting period for a discharge, which is two years. Often it is possible to qualify before the two years has elapsed, but it would depend on extenuating circumstances and be evaluated on a case by case basis.
Thanks for the feedback, and let me know if you have any other questions. Thanks!
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I was discharged from my chapter 7 bankruptcy in march or may of 2010. I filed bankruptcy because i was involved in a car accident that left me in the intensive care unit of the hospital for 1 month and my insurance for my vehicle would not cover the costs. so i incurred over 300k in bills to the hosp. and private doctors. I now have recovered and have a decent job where i bring home about 650 to 750 dollers a wk after taxes and would like to start rebuilding my credit for hopes of soon buying my own homw without such high interest rates. can you give me some advice on where to start please?
Hi Chad, thanks for the comments. The best thing to do is continue to stay current on payments and your credit will heal with time. Per FHA guidelines, you may be able to qualify for an FHA loan even now because it sounds like you have some significant extenuating circumstances and it’s been more than year. However, banks often add their own guidelines on top of the FHA guidelines, so it may be tough to find a bank that will do the loan though it may meet FHA guidelines. The best plan would be to wait for the full two years to reestablish credit and build up some savings.
HI we had to file a bankruptcy. Chapter 13 repayment plan we have 2 years left. As part of the bankruptcy we also lost our home. We were under construction on an addition when i shattered my leg. So the lawyer said to let it go into forclosure. Right after we filed my leg gave way I fell and broke neck in 2 spots. Yeah I know bad year. Ok here is my ?. My husband and I make 11 grand a month. Our rent is 2. I know we can buy a house and hold a payment for much less. Are there investors out there willing to help if you are in bankruptcy that had a forclosure attacted to it. If so how do we find said investors. What should I expect as a down payment now. Any adivce would be great.
Hi Michelle, thanks for stopping by! To get a loan you’re pretty much going to need to be out of the Chapter 13 and have at least two years history since the foreclosure. Lenders typically won’t do a loan if you have an open Chapter 13. A few years back it was possible to do a refinance with a Chapter 13 open, but the lender typically would require that you pay it off through the loan so that it was complete at closing.
I filed a chapter 7 and included the house. I am now trying to sell the house in a short sale. How long would I have to wait in order to buy another house? Do they take into consideration I filed bankruptcy and included the house or if it forecloses does that count against my record as well. Thanks.
Hi Ken, thanks for stopping by! Chances are that the bankruptcy and foreclosure are both going to be counted against you.
I had this come up recently in another scenario where the individual did pretty much the same thing as you did, but didn’t realize that the home eventually went into foreclosure after the bankruptcy went through. Once the foreclosure was discovered, the loan was declined because it hadn’t been long enough for the individual to qualify for a new loan after a foreclosure.
I know it’s probably not the best news to hear this, but I’d rather give you the straight deal so you don’t start going down the road to getting a loan and discover well into the process that it’s not going to work.
Best of luck to you!
What if I filed bk 7 chapter and included a house that was being foreclosed on while keeping another home that being paid as agreed, the house we kept in is income cash flow. Will we still have to wait because of the 3 years for FHA because of the foreclosure or since the foreclosure was included in the BK will we only have to wait 2 years?
Hi Patrick, both the Chapter 7 and the foreclosure are going to be taken into account when determining the waiting period before you can get new financing. In other words, lenders are going to want to see that you’ve met the waiting period requirements for both before they’ll offer new financing.
One thing that can come up as well is that even though the house was included in the BK, the foreclosure may not record for some time after the BK is discharged. If that is the case, the waiting period for the foreclosure will be calculated from the time the foreclosure is actually recorded on title.
Thanks for stopping by!
Will I be able to get a loan, I’m about to discharge from CH. 13. My credit is descent and I make good money. Will I be able to be approved for a FHA loan, or will I have to wait 2 yrs.
Hi Lisa, actually you may be able to qualify right away once the Chap 13 is discharged. Feel free to give me a call and I can direct you to the right person to help you with that. I don’t know what state you’re in, but if I’m not licensed in your state I’ll be happy to refer you to somebody who is. Thanks!
Hi,
Will the credit score requirement still apply when trying to get an FHA loan after short sale? The reason I asked is because per your information one can get an FHA right after short selling a home. Doesnt short sale affect credit score?
Thanks
Hi James, to be clear, you can qualify for an FHA loan after a short sale as long as there were no late payments prior to the completion of the short sale. Most short sales have lates because it is the distress that leads the bank to agree to the short sale in the first place. If you don’t have any lates, there may not have been much impact to your credit scores, so qualifying could be fairly straightforward from a credit standpoint. If there were lates, you’ll have to wait 3-4 years to get a mortgage. Thanks for stopping by!
i was wondering how long you have to wait to get a home loan after a chapter 13 bankruptcy discharge? I have heard that it’s two years from the actual file date and that it’s possible to get a home loan after a chapter 13 as soon as the next day that it is discharged. could you clear that up?
i have paid back 100% of my debt and have paid my chapter 13 bankruptcy early by 3 years (so it only took a little over 2 years to pay off the debt). It should be discharged in a few months and i would like to buy a house in about 9 months from now. i have a car loan that i obtained during the bankruptcy and have made every payment on time. i have 2 judgements on my credit but was paid 100% through the bankruptcy. actually my payment history has been perfect since i filed. i make pretty good money. i don’t want a co-signer. what are my chances of getting a loan? for some reason my scores aren’t moving up. i really don’t know why since there hasn’t been any negative activity since i filed bankruptcy over 2 years ago. will lenders look at my overall report and give me a chance if the scores aren’t going up?
Hi Christie, thanks for stopping by! Yes, if you have a Chapter 13 that was just completed, it will not by itself be a hindrance to getting a loan. Chapter 7 BK has a waiting period of a few years, but there’s not one for Chapter 13 as long as it was paid as agreed.
Now if your credit scores are still low, you’re definitely going to need to get those up – ideally into the 700s if you can, but you’ll still be able to qualify based on credit scores if they’re in the mid 600s or better.
Also, it’s good the judgments are cleared up, but make sure that is reflected on your credit report. If your credit report is still showing that they’re open, it could bring down your credit scores.
It sounds like you’re on track to achieve your goals. Just keep paying everything on time and get anything that might hurt you cleared up on your credit report and you should be in good shape when you’re ready to purchase.
Have a great weekend!
do you know where i can find that info on the fha website about no waiting period after a chapter 13 bankruptcy discharge as long as it was paid as agreed? I am trying to find something that says that and it’s not clear on what i have found on their website. they only talk about while you are in chapter 13 bankruptcy but nothing about a chapter 13 bankruptcy discharge and no waiting period.
Hi Christie, on the lower right of my blog I have a link to the FHA loan guidelines. Open the guide and do a search for Chapter 13 bankruptcy. You should be able to find more detailed information there. Thanks!
Great info — It’s so easy to get confused between 7s and 13s and the amount of times needed after each before being able to buy — this is a great resource — thanks!
Hi,
Me and my husband just filed an chapter 7. Will we have to wait for 2 years in order to purchase a home or can we purchase right after discharge? We will like to purchase as soon as possible.
Hi Teresa, thanks for stopping by. You’re pretty much going to have to wait two years after the discharge to purchase a home. It’s possible that you might be able to sooner, but you’d have to document extenuating circumstances, which is not necessarily easy to do because it’s more of a gray area from an underwriting perspective.
One option might be to find a private seller who is willing to do some kind of owner financing deal for you. That is more common these days just because it’s so much harder to get mortgages.
Hi, we have a chapter 7 bankruptcy discharged in August 2011. We included our home in the bankruptcy and are now short selling it. Can we purchase a home 2 years after the discharged bankruptcy since we included the home in it, or do we still have to wait 2 years after the short sale is complete?
Hi Karen, thanks for stopping by. A lender is going to look at both the bankruptcy and short sale when figuring out how long until you can get a loan again. If the bankruptcy waiting period expires after the short sale, they’ll go off that one. If the short sale waiting period is up after the bankruptcy waiting period, that’s the date they’ll use to determine eligibility for a loan.
To get an idea when you might begin applying, add the appropriate waiting periods to the BK discharge date and the date the short sale closed. You can begin applying for home loans once the latest date comes around.
Thanks!
Its been a year and a half since the discharge of our chapter 7 bankruptcy. My wife and her brother have recently inherited there grandmothers house. We thought about purchasing her brothers half privately but its not really the house we want. When it sells, we would have approx $70,000 to use as down payment on a house. With this much of a down payment, will it be easier to obtain a mortgage even though it hasn’t been 4 years? Or would we still have to wait the 4 year mark?
Hi Bryan, actually, FHA guidelines allow you to qualify just two years after a Chapter 7 discharge. If it takes you a few months to sell the one house and find a new one, you’ll probably be pretty close to the two year mark anyway so you probably could get the ball rolling on a new FHA purchase loan. You’ll just need to demonstrate that you’ve reestablished your credit over the past few years and you should be fine from a credit standpoint.
Feel free to contact me back once you’re a little closer to getting things going. Thanks for stopping by!
Hi there!
I have a quick question. I filed for Chapter 7 Bankruptcy as a result of a divorce. My ex-husband made it clear to me that he was going to be filing, which would have sent all of his acquired debt to me since our divorce wasn’t finalized yet. I was told by my divorce lawyer that I needed to file to protect myself. I ended up filing first, because I didn’t want any future problems as a result of waiting. My ex-husband received our marital home in the divorce, but never refinanced it to remove my name. He stopped making payments on it, and it has since been seized by the sheriff and is up for sheriff’s sale. I did include the home in my BK because my lawyer had a feeling he would do something like this. Mid-February will be two years from my discharge date for my BK. Is there a way around the foreclosure waiting period since he was awarded the house in the divorce?
Thanks for you input:)!
Hi Michelle, I wouldn’t be able to tell for sure without seeing all the documentation, but it sounds like the foreclosure shouldn’t be counted against you because you no longer had responsibility for the house. It would show up on your credit, but once an underwriter was able to document that the foreclosure was on a property you no longer were responsible for, then they should be able to disregard. Thanks for stopping by!
I dont know if you would be able to help me but hoping maybe direction as to who can. Back in 2009 we filed Chapter 13, for 3 years it was paid on time. In 2010 I decided to seperate and later that year we converted the 13 to 7. It was dismissed back in beginning of 2011 it was discharged. Since then I’ve obtain a credit card and car and have been paying on time. I’ve lived in the same place for the last 2 years, had the same job for almost a year now and my credit score is higher than 620 but not by that much. Is there anyone who would offer me a mortgage loan? The reason we converted to 7 was because of the divorce and the fact that we would not (at the time) been able to make the payments.
Sorry the timeline doesnt match. We first filed in 2007.
Sorry also forgot to mention we also had a house and it was given up with the 7.
Hi Maria, honestly, it’s probably going to be tough to find a loan for a few years. You’re going to be subject to a waiting period to get new financing for both the Chapter 7 and the giving up of the house, which probably will be considered a foreclosure. I’m not sure what your discharge date was for the Chapter 7, but you’ll be subject to the waiting periods above (in the post) and the waiting period for the foreclosure. Once both have elapsed, you’ll be able to qualify for new bank financing (assuming guidelines stay the same).
If you’re looking to buy sooner, I recommend finding a seller that will offer some kind of owner financing. The terms won’t be as attractive as a bank loan, but you can still be an owner, reestablish your credit in the meantime, and refinance down the road once the waiting periods are over.
Thanks for stopping by!
Hi, I would appreciate a response to my question but just a little background first. When I purchased our home in 2005 it was purchased with me being the borrow because my credit was excellent and had been for over 25 years. Although, my wife is on the deed but, not on the loan. A couple of years ago I submitted to my bank a request for a home modification loan not because I was behind it was because I had a ARM and the payments was going to increase another $300/mo. Still had excellent credit. Entered into a loan mod with my bank and my bank started reporting me delinquent. Keep in mind never missing any payments ever but, now my credit is destroyed and I still do have a loan mod. My wife has excellent credit and I’m going to take a Chapter 7 because now my house is underwater to the tune of around 100k. We want to purchase another home with only my wife as the borrower but, she will need my income to qualify. So will we have to wait 2 years before I can use my income along with hers to purchase a home or can we qualify for a mortgage loan. Sorry for so much info to ask a simple question. Thanks
Hi Roy, thanks for stopping by. Yes, if you are going to be using both of your incomes to qualify for the new loan, then the bankruptcy will come into play because it’s on your credit record. Unfortunately, there’s no way around that if you need both incomes to qualify for the new loan.