If you’ve ever declared bankruptcy, you might have assumed that your bankruptcy would disqualify you from home ownership; but the good news is that you will likely still be able to buy a home after declaring bankruptcy! Filing for bankruptcy does not in and of itself create a permanent barrier to home ownership. After your bankruptcy is discharged, you likely will be subject to a waiting period in which you won’t qualify for a new mortgage due to your post-bankruptcy credit score, but following your bankruptcy you will be able to purchase a home as long as you build back your credit like every other borrower.
How soon after a bankruptcy will I be able to buy a home?
The answer to that question will depend on a few factors, including whether you filed for Chapter 7, Chapter 11 or Chapter 13 bankruptcy. Chapter 13 bankruptcy filings generally have the most lenient post-bankruptcy wait periods before you will be able to obtain a new mortgage loan. FHA and VA loan programs, backed by the federal government, have a 1-year waiting period once your bankruptcy is discharged before you will be eligible to apply for a new mortgage loan. Conventional lenders may require a 2-year waiting period since your bankruptcy discharge, although it is always worth shopping around to see if different lenders can offer you more attractive terms.
While a bankruptcy does negatively and severely impact your credit, it does not do so for forever. About 2 years after the discharge of your bankruptcy, you will see your scores start to increase and climb again (as long as you are timely and on time payment on any debt, of course!).
Additionally, there are mortgage lenders who specialize in mortgages following bankruptcy, and lenders who will write mortgages within a year or less after your bankruptcy, although in those cases you’ll want to carefully review all terms and the mortgage interest rate offered as it is likely to be higher than if you wait about 2 years after your bankruptcy to purchase a home.