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Mortgage After Bankruptcy Guide

How to rebuild your credit and qualify for a mortgage after Chapter 7 or Chapter 13 bankruptcy.

NMHL Team2026-01-0210 min read

Bankruptcy and Mortgages

Filing for bankruptcy can feel like the end of your homeownership dreams, but it is not. Millions of Americans have successfully obtained mortgages after bankruptcy. The key is understanding the required waiting periods, taking proactive steps to rebuild your credit, and working with a lender experienced in post-bankruptcy lending. Both Chapter 7 (liquidation) and Chapter 13 (reorganization) bankruptcies have specific timelines and requirements for mortgage eligibility. While the path requires patience and discipline, homeownership after bankruptcy is absolutely achievable with proper planning and guidance.

Bankruptcy does not permanently prevent you from getting a mortgage. Most borrowers can qualify within 2-4 years after discharge with the right preparation.

Required Waiting Periods

Each loan type has specific mandatory waiting periods after bankruptcy. For Chapter 7 bankruptcy: conventional loans require 4 years from discharge, FHA loans require 2 years from discharge, VA loans require 2 years from discharge, and USDA loans require 3 years from discharge. For Chapter 13 bankruptcy: conventional loans require 2 years from discharge or 4 years from dismissal, FHA and VA loans allow application with court approval after 12 months of on-time plan payments with the bankruptcy still active, and USDA requires 1 year of plan payments. These waiting periods are measured from the discharge date, not the filing date.

Key Tips

  • The waiting period starts from the discharge date, which may be months or years after filing
  • FHA and VA offer the shortest waiting periods, making them the fastest path back to homeownership
  • Extenuating circumstances like job loss or medical emergency may allow shorter waiting periods for some programs

Rebuilding Your Credit After Bankruptcy

Rebuilding credit after bankruptcy requires deliberate action. Start immediately after discharge by opening a secured credit card and using it responsibly, making small purchases and paying the balance in full each month. After 6-12 months of positive history, apply for a credit-builder loan from a credit union. Continue making all payments on time without exception. Keep credit utilization below 30%, ideally below 10%. Do not apply for multiple credit accounts at once. Monitor your credit reports regularly to track your progress and dispute any errors. Most post-bankruptcy borrowers can rebuild their credit to mortgage-qualifying levels within 12-24 months of consistent positive credit behavior.

Key Tips

  • Open a secured credit card immediately after discharge to start rebuilding
  • Make every single payment on time, as payment history is the most important factor in credit recovery
  • Consider becoming an authorized user on a family member's credit card with a long positive history

Qualifying for a Mortgage After Bankruptcy

When you are ready to apply for a mortgage after bankruptcy, you will need to demonstrate financial recovery. Lenders want to see reestablished credit with on-time payments, stable employment and income, sufficient savings for a down payment and closing costs, and a clear explanation of the circumstances that led to bankruptcy. Having a letter explaining the circumstances, especially if they were beyond your control like medical emergencies or job loss, can strengthen your application. Work with a lender like NMHL that specializes in helping post-bankruptcy borrowers navigate the qualification process and choose the right loan program for your situation.

NMHL has helped thousands of post-bankruptcy borrowers achieve homeownership. Your past does not define your future when it comes to mortgage eligibility.

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Frequently Asked Questions

The shortest path is FHA or VA loans at 2 years after Chapter 7 discharge, or 12 months into a Chapter 13 repayment plan with court approval. Conventional loans require 4 years after Chapter 7. USDA requires 3 years. Working to rebuild credit during the waiting period is essential.

Not necessarily. If you rebuild your credit to 640 or higher during the waiting period, you can qualify for competitive rates. The further removed you are from the bankruptcy and the stronger your credit recovery, the better your rate will be. Many post-bankruptcy borrowers achieve rates similar to non-bankruptcy borrowers.

If your bankruptcy included a foreclosure, you may have separate waiting periods. The foreclosure waiting period runs concurrently with the bankruptcy waiting period in most cases. Conventional loans require 7 years after foreclosure, FHA requires 3 years, and VA requires 2 years. The longer waiting period applies.

Related Resources

Credit Score Mortgage Guide

How to improve your credit score for mortgage qualification.

FHA Loan Complete Guide

FHA loans offer the shortest waiting period after bankruptcy.

Mortgage Pre-Approval Guide

Getting pre-approved after bankruptcy.

FHA Loans

Federal Housing Administration (FHA) loans are government-backed mortgages designed to help first-time homebuyers and those with less-than-perfect credit achieve homeownership. With lower down payment requirements and flexible credit guidelines, FHA loans make homeownership accessible to more Americans.

VA Loans

VA loans are a benefit earned by veterans, active-duty service members, and eligible surviving spouses. Backed by the Department of Veterans Affairs, these loans offer unmatched benefits including no down payment, no mortgage insurance, and competitive rates.

Conventional Loans

Conventional loans are not backed by government agencies and typically offer the most flexibility for qualified borrowers. With options for as little as 3% down and the ability to cancel mortgage insurance, conventional loans are ideal for borrowers with good credit.

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