Buying a House After Bankruptcy

May 30, 2024


If you're struggling financially and have dreams of owning a home in the future, you may be hesitant about bankruptcy as a debt relief option. In order to qualify for a mortgage, it is important to get your finances back on track, even if it means considering bankruptcy. Without a practical debt relief solution, you could face debt collectors, lawsuits, and wage garnishments. These obstacles can seriously damage your credit score and hinder your goal of becoming a homeowner. Don’t let misconceptions about bankruptcy stop you from learning whether it's the right debt relief option for your situation. While there is a waiting period after bankruptcy to qualify for a mortgage, it is probably shorter than you think. Let's discuss how long you need to wait after filing for bankruptcy to qualify for a mortgage and what steps you should take during this time.


The timeframe to qualify for a mortgage after filing bankruptcy varies depending on the type of bankruptcy and the type of mortgage involved. The waiting period starts from the date your debts were discharged in bankruptcy. Generally, you must wait:


The minimum time requirements must be met before becoming eligible for a specific mortgage option. The most common types of mortgages are FHA, VA and conventional loans, each has their own benefits. A brief overview of them and some of their requirements are reviewed below. Ultimately, the requirements are up to the individual lender, but the standard requirements are:

FHA Loan- A Federal Housing Administration (FHA) loan is a government-insured home mortgage provided by an approved bank or lender. An FHA loan’s minimum credit score requirement is between 500 and 579 with a 10% down payment. If your credit score is 580 or higher, you may qualify for an FHA loan with as little as 3.5% down. Private mortgage insurance is required if your down payment is less than 20%.

VA Loan – A government-backed home mortgage partially guaranteed by the U.S. Department of Veterans Affairs (VA) provided by an approved bank or lender for active-duty military, veterans, and surviving spouses. There is no set minimum credit score or down payment requirements. They do not require private mortgage insurance. However, they do charge a one-time funding fee of up to 3.3% of your loan to help cover the program costs.

Conventional Loan – A mortgage originated and serviced by private lenders such as banks, credit unions or other financial institutions. They are not backed by any government agency. A conventional loan’s minimum credit score requirement is between 620 and 660 with at least a down payment of 3%. Private mortgage insurance is required if your down payment is less than 20%.

Typically, the higher your credit score and down payment, the better your interest rate and loan terms will be. Your debt-to-income ratio also impacts your approval. After filing bankruptcy and eliminating your burdensome debts, you can get your finances back on track.


During the waiting period, it is important to rebuild your credit and your savings to qualify for a mortgage. Once your debts are discharged in bankruptcy, it will be easier to implement your money management skills. When you apply for a mortgage, the lender will see how much your financial situation has improved. Here are a few suggestions to help you:

Satisfy Money Judgments: If you had money judgments, bankruptcy eliminates the money owed, but bankruptcy is in federal court while money judgments are in state court. Since the courts don’t communicate, it’s important to file a Satisfaction of Judgment Due to Bankruptcy in state court after you receive your discharge.

Create a New Budget: Creating a budget can help you reduce your expenses, avoid overspending and build up savings. List all your income and detailed expenses. Eliminate any unnecessary expenses to increase your savings. You can use budgeting software, an excel spreadsheet or even just a pen and paper. Remember to review and adjust your budget when necessary.

On Time Payments: It is crucial to stay current on all bills after bankruptcy, especially any secured debt you choose to reaffirm. Rebuilding a good payment history and having positive information report to your credit each month is important. A secured credit card or a credit building loan may also be a good option. Just make sure to adjust your budget, avoid interest and make timely payments.

Income to Debt Ratio: Bankruptcy gets rid of your unsecured debts such as credit cards, medical bills, payday loans or previously repossessed vehicles. Maintaining a low debt to income ratio can improve your credit score and impact your eligibility for a mortgage. So, be cautious about taking on new debt after your bankruptcy.

Fix Credit Report Errors: Make sure to review your credit report for errors and dispute any you come across. You want to ensure your creditors are reporting your bankruptcy accurately. After approximately two months after discharge, the debts included in bankruptcy should show up with a zero balance and should be labeled as discharged, included in bankruptcy, or similar language.


Bankruptcy is not the best debt relief solution for everyone, but it could be the first step towards repairing your credit in order to obtain a mortgage and reach your goal of homeownership. At Pedersen Law Office, LLC we understand how stressful being in debt can be; that is why we offer free consultations. We will meet with you personally to help you figure out the best debt relief option for you and help you through the entire process. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.

Category: Bankruptcy

Tag Cloud