Obtaining a mortgage after bankruptcy may sound like an impossibility, though it really isn’t. All it takes is a little waiting time and the rebuilding of your financial reputation to put you on the road to being a homeowner once and for all. But certain mortgages take longer than others to acquire after a bankruptcy discharge. It all depends on whether you want a home mortgage that’s specialized like an FHA or VA loan.
General Length of Time for a Conventional Mortgage
If you happened to file Chapter 7, you unfortunately have to wait four years after a bankruptcy discharge. It’s a little easier if you decided to file for Chapter 13 and pay back your debts over time. You only have to wait two years after that discharge to get the best possible rates on a home loan. Keep in mind, though, that you could technically obtain a mortgage earlier under Chapter 13 with specific loans, even if your credit score may not be totally repaired yet to take advantage of better interest rates.
Things to Do to Repair Your Financial Standing
The first thing you need to do is re-establish your credit so your credit score will be in top shape for a home loan. You’ll likely start getting offers for credit cards with small limits within a year after your bankruptcy is over. Use just one and be sure to pay your bills on time over the next decade to rebuild your credit.
You can also take out installment loans for gradual payback. These work just as well as credit and go on your credit score. It also helps to make occasional early or even a few double payments to ensure that your financial reputation gets repaired to the fullest.
How Long You Have to Wait for Certain Home Loans
Outside of conventional loans, a Chapter 13 bankruptcy will allow you to obtain some specialized loans after a year of successful debt payments. FHA loans, for instance, can be done after that first year of payments and approval from the bankruptcy court. Otherwise, you’ll have to wait two years after the bankruptcy discharge.
USDA loans are the easiest on the waiting times for Chapter 13. It’s possible to obtain one only a year after your Chapter 13 bankruptcy discharge. And you can get one earlier after a year of successful Chapter 13 payments. One down side is you have to wait three years after a Chapter 7 discharge to even be considered.