How Long After Bankruptcy Can You Buy a Home?

If you’ve declared bankruptcy – or are thinking about it – you might be wondering how that will affect your home-buying prospects. In short, it is possible to buy a home after bankruptcy – and the details of your circumstances dictate exactly how long it will take.

This blog will cover some of the most common scenarios to give you an idea of where you stand, and the steps you can take to get all the way from bankruptcy to homeownership.

Types of Bankruptcy

The type of bankruptcy you file will have a different impact on your ability to buy a home. There are two types of consumer bankruptcies: Chapter 7 and Chapter 13. Let’s take a look at how they each affect home loans.

Chapter 7

This is the most common kind of bankruptcy – and one that will seriously affect your credit score. If you’ve filed a Chapter 7, you’ll have to wait at least four years from the time your bankruptcy is dismissed or discharged until you can qualify for a conventional loan. Government-backed home loans are a bit less strict: for an FHA or VA loan, you’ll only need to wait for two years.

Chapter 13

This kind of bankruptcy is less serious than a Chapter 7 – and consequently, your credit score isn’t hit as hard. The time period before you can apply for a conventional loan after a Chapter 13 depends on if your bankruptcy is dismissed or discharged.
If it’s dismissed, you’ll have to wait at least four years from the dismissal date. But if it’s discharged, the waiting period is just two years from the dismissal date (and four years from the date you originally filed).

Same as with Chapter 7s, government-backed loans are more lenient. FHA and VA loans just require a court to dismiss or discharge your loan before you apply – there is no waiting period.

Home Loans After Bankruptcy

When it comes to what kind of loan to shoot for, you have some options. If the waiting period is a key concern, you may elect to go with a government-backed loan. FHA and VA loans come with their own pros and cons. Whether they are suited to you or not will depend on your situation: your credit score, your down payment, the price of your home, your other debt, etc. Whatever kind of loan you end up seeking, you will need to rebuild your credit score. So if you know that you want to buy a home after bankruptcy, that should be your first priority.

Generally speaking, home loans are a trade-off between price, flexibility, and qualification – which means you’ll probably find yourself prioritizing one of those three aspects in your decision-making. That’s where UW Funding comes in. We can apply our expertise to your situation and help you navigate which home loan to apply for in order to successfully buy a home after bankruptcy. And we can help you build your credit score back up too. Reach out today for a no-obligation chat to find out how we can help you get there.