Buying a house after bankruptcy is possible, and many people do it. The main hurdles are lender waiting periods, which depend on the type of mortgage and whether you filed Chapter 7 or Chapter 13, and rebuilding a credit history that shows steady payments. Bankruptcy does not bar you from owning a home; it changes the timeline.
If you are still deciding whether to file and want to understand how it could affect future homeownership, call (415) 754-0115 to schedule your free consultation, or use the contact page.
Why lenders use waiting periods
A bankruptcy stays on a credit report for years: up to ten years for Chapter 7 and usually seven years for a completed Chapter 13. Mortgage lenders do not simply refuse anyone with a bankruptcy on their report. Instead, most loan programs set a minimum waiting period after the discharge or dismissal, then look at how you have handled credit since. Our article on how bankruptcy affects your credit score explains the reporting side.
Common waiting periods by loan type
These are the general guidelines widely published for major loan programs. Programs update their rules, and individual lenders can add stricter requirements, so a lender or mortgage professional is the right source for current terms.
After a Chapter 7 discharge
- FHA loans: generally two years after the discharge date
- VA loans: generally two years after the discharge date
- USDA loans: generally three years
- Conventional loans: generally four years after discharge or dismissal
During or after Chapter 13
Chapter 13 can open an earlier path. FHA and VA programs may allow a purchase after about one year of on-time plan payments, with permission from the court or the Chapter 13 trustee. Conventional loans generally require two years after a Chapter 13 discharge, or four years after a dismissal.
Extenuating circumstances
Some programs shorten the wait when the bankruptcy was caused by events outside your control, such as a serious illness or the death of a wage earner, and you can document it. Lenders decide these case by case.
Steps that help when buying a house after bankruptcy
The waiting period is only part of it. Lenders want to see that the problem that led to the filing has been resolved. Common steps include:
- Checking all three credit reports after discharge to confirm discharged debts show a zero balance and are marked as included in bankruptcy
- Opening one or two accounts, such as a secured card, and paying them on time every month
- Keeping balances low compared with credit limits
- Building savings for a down payment and closing costs
- Keeping steady employment and documented income
- Paying rent on time and keeping records, since some lenders consider rental history
Our guide to rebuilding credit after bankruptcy goes deeper on each of these.
Talk to a lender early
Many people wait until the waiting period ends before speaking with a mortgage professional. Meeting with one earlier can show what a lender will look for, such as a minimum credit score, a target debt-to-income ratio or a certain number of months of reserves, so the time before you qualify is spent working toward specific goals.
Keep your bankruptcy paperwork
Lenders typically ask for your discharge order and sometimes the full petition and schedules. Store a digital and paper copy. If a lender asks for a letter explaining the bankruptcy, a short, factual explanation of what happened and what has changed is usually what they want.
How the choice of chapter can affect a future purchase
If homeownership is a goal, it is worth raising before you file. Chapter 7 is faster, which starts the waiting period sooner. Chapter 13 takes three to five years, but may let you keep property, catch up on arrears, and in some programs buy a home during the plan with approval. Which route fits depends on your income, the means test and what you need to protect.
If you already own a home and are behind on payments, the question is different: whether you can keep the house you have. Our article on keeping your house in Chapter 7 covers that. The Somal Law Firm advises Tri-Valley and East Bay clients on Chapter 7, Chapter 13 and foreclosure defense, so the bankruptcy decision and the housing question can be looked at together. You can see the full list of practice areas on our site.
Raising homeownership plans early also helps avoid mistakes, such as reaffirming a debt that later weighs on a mortgage application or taking on new credit during a case without approval.
Watch for these pitfalls
- Credit repair offers that promise to remove an accurate bankruptcy from your report. Accurate information cannot simply be deleted.
- Reaffirmed debts you forget about. A car loan you reaffirmed in Chapter 7 still counts toward your debt-to-income ratio.
- New collections on small medical or utility bills, which can set back an application.
- Taking on new debt during a Chapter 13 plan without permission, which can create problems with the trustee.
Frequently asked questions
Does the waiting period start at filing or at discharge?
For most programs it is measured from the discharge or dismissal date, not the filing date. Chapter 13 purchases during the plan are measured by plan payments made.
Can I buy a house while in Chapter 13?
Some loan programs allow it after a period of on-time plan payments, but you would generally need approval from the court or trustee before taking on a mortgage.
Will a past foreclosure add to the wait?
It can. Loan programs often treat a foreclosure separately, and the date the foreclosure was completed may matter. A lender can explain how both events are treated for you.
Can an attorney help me plan for a future home purchase?
An attorney can review your situation before you file and explain how each chapter might affect your timeline, your current property and your credit going forward.
To talk through how bankruptcy could fit with your plans to own a home, call (415) 754-0115 to schedule your free consultation with The Somal Law Firm in Pleasanton. You can also reach us on the contact page. We will review your debts, your goals and the options that may fit.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.