How Long After Bankruptcy Can You Get a Mortgage? 2025 Waiting Periods

Bankruptcy devastates your credit score and makes traditional mortgage approval impossible immediately after discharge. However, waiting periods are shorter than most people realize—FHA requires only 2 years after Chapter 7 bankruptcy, and some non-QM lenders approve as soon as 12 months post-discharge with compensating factors. Understanding the specific waiting periods for each loan type, how to rebuild credit strategically during the waiting period, and which lenders approve post-bankruptcy borrowers helps you return to homeownership faster.

This guide covers exact waiting periods for FHA, conventional, VA, USDA, and non-QM loans after Chapter 7 and Chapter 13 bankruptcy, plus strategies to qualify sooner and rebuild credit effectively.

Chapter 7 vs. Chapter 13 Bankruptcy: Different Waiting Periods

Chapter 7 Bankruptcy (Liquidation)

Chapter 7 wipes out most unsecured debts (credit cards, medical bills, personal loans) but requires liquidation of non-exempt assets. Most Chapter 7 cases complete in 4-6 months from filing to discharge.

Mortgage Waiting Periods:

• FHA: 2 years after discharge
• Conventional: 4 years after discharge (2 years with extenuating circumstances)
• VA: 2 years after discharge
• USDA: 3 years after discharge
• Non-QM: 12-24 months after discharge

Chapter 13 Bankruptcy (Repayment Plan)

Chapter 13 involves a 3-5 year court-supervised repayment plan. You keep your assets but must repay a portion of debts over time.

Mortgage Waiting Periods:

• FHA: 12 months into repayment plan with court approval and trustee permission
• Conventional: 2 years after discharge, or 4 years after dismissal
• VA: 12 months into repayment plan with court approval
• USDA: 12 months into repayment plan with court approval
• Non-QM: Varies by lender, some approve during active repayment

Key Difference: Chapter 13 allows you to apply for mortgages before discharge—as soon as 12 months into your repayment plan—if you obtain court and trustee approval. Chapter 7 requires waiting until after discharge.

FHA Loans After Bankruptcy (Shortest Waiting Period)

FHA offers the fastest path back to homeownership for post-bankruptcy borrowers:

Chapter 7: 2 Years After Discharge

You can apply for an FHA loan 2 years after your Chapter 7 discharge date (not filing date). Requirements:

• Discharge date + 2 years: If you were discharged on January 15, 2023, you can apply January 16, 2025
• Re-established credit: At least 2-3 tradelines with 12 months of on-time payments (credit cards, auto loans, installment loans)
• Explanation: Bankruptcy was caused by extenuating circumstances beyond your control (medical emergency, job loss, divorce)
• No late payments: Clean payment history for all accounts in the 12-24 months after discharge
• Credit score 580+: For 3.5% down; 500-579 requires 10% down

Chapter 13: 12 Months Into Repayment Plan

You can apply while still in Chapter 13 repayment if:

• 12 months of on-time payments to the bankruptcy trustee (verified with trustee payment records)
• Court approval: Bankruptcy court authorizes the new mortgage debt
• Trustee permission: The trustee overseeing your case approves
• Satisfactory payment history: All plan payments made on time with no missed or late payments

Extenuating Circumstances Exception

FHA allows 12-month waiting periods (instead of 2 years) if bankruptcy was caused by extenuating circumstances:

• Job loss due to company closure or mass layoff (not voluntary resignation)
• Serious illness or medical emergency requiring extensive treatment
• Death of primary wage earner

You must document extenuating circumstances with termination letters, medical records, death certificates, etc., and show financial recovery since the event.

Conventional Loans After Bankruptcy (Longer Waits)

Conventional loans (Fannie Mae, Freddie Mac) have stricter waiting periods than FHA:

Chapter 7: 4 Years After Discharge

Standard waiting period is 4 years from discharge date. Requirements:

• 4 years minimum: No exceptions for standard circumstances
• 2 years with extenuating circumstances: Reduced wait if bankruptcy resulted from events beyond your control
• Re-established credit: 3-4 tradelines with 24 months of excellent payment history
• Credit score 620+: Most lenders require 640-660 minimum
• Larger down payments: Expect 10-20% down for post-bankruptcy conventional loans

Chapter 13: 2-4 Years After Discharge

If you completed Chapter 13 repayment and were discharged, wait 2 years. If you dismissed Chapter 13 (did not complete the plan), wait 4 years from dismissal.

Extenuating Circumstances for Conventional

Fannie Mae and Freddie Mac define extenuating circumstances as:

• Events beyond your control (not poor financial management)
• Documented with evidence (medical records, layoff notices, death certificates)
• Single occurrence (not chronic pattern of financial problems)

If your bankruptcy qualifies, the waiting period drops to 2 years for Chapter 7.

VA Loans After Bankruptcy (Military and Veterans)

VA loans have waiting periods similar to FHA:

Chapter 7: 2 Years After Discharge

Eligible veterans and active-duty service members can apply for VA loans 2 years after Chapter 7 discharge. Requirements match FHA—re-established credit, no recent late payments, and explanation of circumstances.

Chapter 13: 12 Months Into Repayment Plan

VA allows mortgage applications 12 months into Chapter 13 repayment with court and trustee approval, on-time trustee payments, and satisfactory payment history.

VA Advantages for Post-Bankruptcy Borrowers

• No down payment required (0% down)
• No private mortgage insurance
• More flexible credit score requirements (some VA lenders approve 580-600 scores)
• Residual income focus (not just DTI) helps borrowers with lower scores

Veterans with post-bankruptcy credit should prioritize VA loans over conventional whenever possible.

Non-QM Loans After Bankruptcy (Fastest Approval)

Non-qualified mortgage (non-QM) lenders offer the shortest waiting periods but charge higher rates:

12-24 Months After Discharge

Some non-QM lenders approve as soon as 12 months after Chapter 7 or Chapter 13 discharge with:

• Large down payments: 20-30% down
• Strong compensating factors: High income, significant cash reserves, stable employment
• Re-established credit: 2-3 tradelines with 12 months of on-time payments
• Higher interest rates: 7-10% (vs. 6-7% for FHA/conventional)

During Active Chapter 13 Repayment

A few non-QM portfolio lenders approve borrowers during Chapter 13 repayment without court approval, though this is rare and expensive.

When Non-QM Makes Sense

• You need to buy immediately and cannot wait for FHA/conventional waiting periods
• You are self-employed with low tax returns (non-QM offers stated income or bank statement loans)
• You have recent foreclosure in addition to bankruptcy (non-QM combines waiting periods)

Once you improve your credit and reach FHA/conventional eligibility, refinance to lower rates.

How to Rebuild Credit During Bankruptcy Waiting Periods

Waiting 2-4 years does not mean doing nothing—strategic credit rebuilding during the waiting period maximizes approval odds when you apply:

Step 1: Obtain Secured Credit Cards (Immediately After Discharge)

Secured credit cards require a cash deposit ($200-$500) that becomes your credit limit. They report to credit bureaus like regular cards and are the fastest way to rebuild credit post-bankruptcy.

Strategy:

• Apply for 2-3 secured cards within 1-2 months of discharge
• Use them for small recurring charges (Netflix, gas, groceries)
• Pay off the full balance every month (never carry balances)
• After 6-12 months, card issuers may convert to unsecured and return your deposit

Step 2: Get a Credit Builder Loan

Credit builder loans (offered by credit unions and online lenders) are small loans ($500-$2,000) where the lender holds the funds in a savings account while you make monthly payments. After the loan is paid off, you receive the funds plus interest.

Purpose: Builds installment loan payment history, which manual underwriters view favorably.

Step 3: Become an Authorized User on a Family Member’s Card

If a parent, spouse, or sibling has an established credit card with 2+ years of perfect payment history, ask to be added as an authorized user. You inherit their payment history and credit limit, which can boost your score 30-60 points within 1-2 months.

Requirements:

• The primary cardholder must have excellent payment history (no late payments)
• Low utilization (ideally under 30%)
• The card issuer must report authorized users to credit bureaus (most do)

Step 4: Pay All New Accounts On Time (12-24 Months Clean History)

Manual underwriters for FHA and conventional loans require 12-24 months of perfect payment history after bankruptcy. Even one late payment can delay approval by 6-12 months.

Set up automatic payments for:

• Rent (document with canceled checks or bank statements)
• Utilities (electric, gas, water)
• Credit cards (pay statement balance automatically)
• Auto loans or installment loans (if applicable)

Step 5: Keep Credit Utilization Under 30% (Ideally Under 10%)

Once you have credit cards, keep balances low. High utilization signals financial distress and lowers your score.

Example: You have a $500 secured card. Keep balances under $150 (30%) or $50 (10%). Pay off in full each month to avoid interest.

Common Post-Bankruptcy Mortgage Mistakes

Mistake 1: Counting from Filing Date Instead of Discharge Date

Waiting periods start from the discharge date, not filing date. Chapter 7 typically discharges 4-6 months after filing. If you filed January 2023 but were discharged July 2023, your 2-year FHA wait ends July 2025 (not January 2025).

Mistake 2: Not Rebuilding Credit During the Waiting Period

Lenders require re-established credit—2-3 tradelines with 12-24 months of on-time payments. If you wait 2 years after discharge but do not rebuild credit, you will not qualify. Start rebuilding immediately after discharge.

Mistake 3: Incurring New Late Payments or Collections

A single late payment or new collection during the waiting period can push approval back 6-12 months. Protect your credit aggressively during this time.

Mistake 4: Not Documenting Extenuating Circumstances

If your bankruptcy resulted from medical emergency, job loss, or death in the family, document everything. Extenuating circumstances reduce waiting periods from 4 years to 2 years (conventional) or 2 years to 12 months (FHA).

Mistake 5: Applying Too Soon

Applying before you meet the waiting period wastes time and triggers hard inquiries. Verify your discharge date and calculate exact eligibility before applying.

Should You Wait for Conventional or Go FHA Sooner?

FHA Advantages

• Shorter wait (2 years vs. 4 years)
• Lower down payment (3.5% vs. 10-20%)
• Easier credit score requirements (580+ vs. 620+)
• More flexible manual underwriting

FHA Disadvantages

• Mortgage insurance for life (on 3.5% down loans)
• Higher total borrowing costs due to upfront and monthly MIP

Strategy

Apply for FHA at the 2-year mark to return to homeownership sooner. Once you have 20% equity and your credit improves to 680+, refinance to conventional to eliminate mortgage insurance. This two-step approach gets you into a home faster while eventually removing FHA’s insurance costs.

Final Thoughts on Mortgages After Bankruptcy

Bankruptcy does not end your homeownership dreams—it delays them by 12 months to 4 years depending on loan type. FHA offers the fastest path (2 years after Chapter 7, 12 months into Chapter 13), while conventional requires 4 years. Non-QM lenders approve sooner but charge higher rates.

The key is rebuilding credit aggressively during the waiting period—obtain secured credit cards immediately after discharge, make every payment on time for 12-24 months, and document extenuating circumstances if applicable. Work with bad credit specialists who understand post-bankruptcy lending and can guide you through the process.

Check your credit recovery progress at MiddleCreditScore.com, compare post-bankruptcy lenders at BrowseLenders.com, and once you improve your credit, explore refinancing at Cash-OutRefinance.com.