Link copied to your clipboard

Can I buy a house after bankruptcy?

Buying a house after bankruptcy is difficult, but possible. Here’s what you need to know.

Anna Baluch
November 21, 2023

Explore the series: Understanding bankruptcy

In this in-depth blog series, learn what to expect after filing for bankruptcy, frequently asked questions, and alternative solutions to consider before filing.

You might also like:
A picture of a yellow and blue box.
A picture of a yellow and blue box.

Get up to $500k from your home equity.

  • No monthly payments
  • No income requirements
Prequalify now
Share on social:

Buying a house after bankruptcy doesn’t have to be a pipe dream. As long as you familiarize yourself with the challenges you might face and understand how to overcome them, you can turn your homeownership dreams into a reality. Here’s what you need to know about buying a house after bankruptcy. 

Can I buy a house after bankruptcy?

Fortunately, you may be able to buy a house after bankruptcy. However, the steps you’ll need to take will depend on the type of bankruptcy you filed, your particular financial situation, and the type of mortgage you’d like to take out. As you shop around for a home loan, you’ll find that lenders typically require you to wait around four to seven years from your bankruptcy filing before you can apply. 

It may be easier to lock in a mortgage once you’ve rebuilt your credit. This is because lenders may be hesitant to lend you money after seeing a bankruptcy remark, which can stay on your record for 10 years if you filed for Chapter 7 and seven years if you filed for Chapter 13. A better credit score will reduce the lender’s risk and in turn, increase your chances of approval. 

How long after bankruptcy can I get a mortgage?

The type of bankruptcy you pursued will determine how long you’ll have to wait before you can get a mortgage.

Chapter 7 bankruptcy 

Also known as liquidation bankruptcy, Chapter 7 bankruptcy is when an individual sells their assets to pay off credit card debt, personal loans, medical bills, and other types of unsecured debts. While bankruptcy will stay on their credit report for up to 10 years, they might still get approved for a mortgage. 

If you filed for Chapter 7 bankruptcy, you’ll typically have to wait at least four years from the court discharge date to be eligible for a conventional mortgage. The waiting period may be shorter if you choose a government-backed loan, such as an FHA loan, USDA loan, or VA loan.

Chapter 13 bankruptcy 

Wage earners bankruptcy or Chapter 13 bankruptcy is when an individual repays some or all of their debts during a repayment period of three to five years. It can stay on their credit report for up to seven years, but doesn’t necessarily disqualify you from a mortgage in the future. 

The amount of time you must wait to apply for a conventional loan after Chapter 13 bankruptcy depends on how the court handles your case. If they dismiss it, meaning your case has been stopped and you’re still responsible for your debts, you’ll be required to wait at least four years from your dismissal date. In the event that the court discharges your bankruptcy and you’re no longer obligated to pay your debts, the waiting period will be four years from your filing date and two years from your discharge date. 

Just like with a Chapter 7 bankruptcy, the waiting requirements are more relaxed for government-backed loans following Chapter 13. Depending on the loan, you may be able to apply as soon as one year after your case, regardless of whether the court discharged or dismissed it. 


What financing options do I qualify for?

There are a number of loans you might want to explore to help you buy a house after bankruptcy, including: 

Conventional loan

A conventional loan is a non-government loan that follows the rules set for by Fannie Mae and Freddie Mac, two agencies that buy and guarantee most mortgages in the U.S.  You can get one through a bank, credit union, or mortgage company.

Eligibility criteria: To secure a conventional loan after bankruptcy, you’ll need a credit score of at least 620 and a minimum down payment of 3%. 

When you can qualify after bankruptcy: You’ll have to wait four years from the date your Chapter 7 case has been dismissed or discharged or four years from the date your Chapter 13 case was filed and two years from the discharge date.

FHA loan

An FHA loan is insured by the Federal Housing Administration (FHA) and offers more flexible requirements for borrowers with low credit scores and small down payments. 

Eligibility criteria: You may get approved for an FHA loan with a minimum credit score of 580 and down payment of at least 3.5%. 

When you can qualify after bankruptcy:  If you filed for Chapter 7, your case must have been discharged or dismissed for at least two years before you can apply. You’ll also need to reestablish good credit or show that you haven’t incurred new debt. With a Chapter 13 bankruptcy on your record, you can apply for an FHA loan right after your case has been dismissed, as long as you’ve made timely payments and received written permission from the bankruptcy court. 

VA loan

Backed by the U.S. Department of Veterans Affairs, a VA loan is designed for veterans, active service members and eligible surviving spouses. 

Eligibility criteria: There are no minimum credit score requirements and you may qualify with no money down. 

When you can qualify after bankruptcy: You can apply for a VA loan after your Chapter 7 case has been dismissed or discharged for two years. If you filed for Chapter 13, there is no waiting period once your case gets dismissed or discharged. 

USDA loan

USDA loans are insured by the U.S. Department of Agriculture for borrowers who wish to purchase homes in qualifying rural communities. 

Eligibility criteria: To lock in a USDA loan, your income can’t exceed 115% of the median income for the area where you wish to buy a home.  While there is no down payment requirement, you do need a credit score of at least 640. 

When you can qualify after bankruptcy: You’ll have to wait a minimum of three years from your Chapter 7 dismissal or discharge date. This waiting period is only one year if you filed for Chapter 13. 

How do I get a mortgage after bankruptcy? 

These steps can help you get approved for a home loan after you complete the bankruptcy process

  •  Organize and gather your documents: Most lenders will require certain documents, such as pay stubs, tax returns, and bank statements. They’ll also want to see proof of your bankruptcy discharge or dismissal so they can determine if you meet their waiting period requirements. 
  • Assess and build your credit: Unfortunately, your credit will suffer after bankruptcy. You can expect your score to drop dramatically and the bankruptcy to stay on your report for seven or 10 years, depending on the type of bankruptcy you filed. To rebuild your credit after bankruptcy and increase your chances of getting approved for a mortgage, make timely payments, repay any debt you have, and avoid taking on new debt. Also, pull copies of your credit reports and dispute any errors or inaccuracies that may be bringing down your score. 
  • Save for a down payment: A larger down payment can lead to a lower interest rate and smaller loan balance. If possible, try to save for a substantial down payment during your waiting period. To do so, you might have to reduce your expenses or earn additional income through a part-time job or side hustle. 
  • Create a budget: Before you actually shop for a mortgage, figure out what you can comfortably afford.  As a general rule of thumb, you shouldn’t spend more than 28% of your gross monthly income on housing expenses, such as your mortgage, homeowners insurance, private mortgage insurance (PMI), and property taxes. Don’t forget to factor in closing costs and plan for home maintenance and repairs. 
  • Shop around: As you do your research, you’ll find that not all lenders are created equal. Some are more lenient than others and willing to approve borrowers with a bankruptcy. Others have extra qualifications bankruptcy borrowers must meet. Find at least a few lenders that have experience with bankruptcy home loans and compare their requirements, interest rates, terms, and fees.
  • Apply for financing: Once you zero in on the ideal lender for your unique situation, it’s time to apply. Be prepared to write a letter of explanation and explain why you’re ready to take out a mortgage after bankruptcy. If your bankruptcy was the result of a sudden job loss or disability, for example, the lender may be more understanding and likely to approve you. You’ll need to reassure them that you have improved your financial situation and will be able to make your mortgage payments. 
  • Respond to lender requests: When you apply for a mortgage, the lender may ask you for more documents. They might also have some further questions about your previous bankruptcy and current financial situation. Be sure to get back to them as soon as you can and be honest with all the information you provide. This way you can avoid delays or denials in the process. 

Final thoughts

You don’t have to forgo homeownership just because you have a bankruptcy on your record. However, you will need to wait a certain amount of time before you can apply, depending on your bankruptcy and loan type. You may also have to settle for higher interest rates and less favorable terms. 

If you do move forward with a mortgage after bankruptcy, be sure to make all your payments on time to avoid default. Otherwise, you may end up in the stressful financial situation you were in before you filed. With these tips, you'll be able to better navigate your journey to homeownership.

No income? No problem. Get a home equity solution that works for more people.

Prequalify in 60 seconds with no need for perfect credit.

Show me my offer
Get home equity, homeownership, and financial wellness tips delivered to your inbox.

Thank you for subscribing!

Check your email for a confirmation. We’ll be in touch soon!
Oops! Something went wrong while submitting the form.

Frequently Asked Questions

No items found.

Point in the media

Our innovative products have been featured in top publications.

Business Insider
Point CEO, Eddie Lim made Business Insider's 100 people who are transforming business
Every year, Insider surfaces 100 leaders across 10 industries who are driving unprecedented change and innovation. Lim, the CEO and cofounder of Point, wants to make it easier for people to tap into that wealth. Lim’s company, which he founded alongside Eoin Matthews in 2015, offers homeowners lump sums of cash in exchange for a stake in their home.
Read this article
Point closes on $115M to give homeowners a way to cash out on equity in their homes
Historically, homeowners could only tap into the equity of their homes by taking out a home equity loan or refinancing. But a new category of startups have emerged in recent years to give homeowners more options to cash in on their homes in exchange for a share of the future value of their homes.
Read this article