Of all the questions I get asked during consultations with potential clients, “When will I be able to buy a house?” has to be in the top five. They are concerned about how bankruptcy will affect their financial future and how long they’ll have to wait before they’ll be approved for a mortgage. Unfortunately, there is no fixed answer for everyone. But for most people, it’s sooner than you think.
First, it depends on whether someone files Chapter 7 or Chapter 13 bankruptcy. Second, it depends on what kind of mortgage they apply for. There are conventional mortgages, Federal Housing Administration (FHA) mortgages, and Veterans Administration (VA) mortgages.
It’s generally accepted that someone who has filed a Chapter 7 bankruptcy can expect to qualify for a convention mortgage four years after getting their discharge (which happens about four months after their petition is filed). A Chapter 7 filer can likely qualify for an FHA loan within one to two years from their discharge, assuming they otherwise qualify for an FHA loan. Finally, a Chapter 7 filer can expect to to qualify for a VA loan within two years from their discharge.
Qualifying for a mortgage after a Chapter 13 bankruptcy can take longer, since the court won’t issue a discharge order in a Chapter 13 until between three and five years after a Chapter 13 case is filed. A Chapter 13 filer can expect to qualify for a conventional mortgage between two and four years after getting their discharge. They can expect to qualify for a FHA mortgage after they have made 12 months of payments to their Chapter 13 trustee with no late payments. The same timeframe applies to VA loans.
Of course, whether someone qualifies for a mortgage depends on other factors besides when they filed bankruptcy. The lender will also look at their income and debts. The above are simply guidelines. Your ability to get a mortgage after bankruptcy will depend on your personal financial situation.
If you have questions about how bankruptcy can affect your financial future, we hope you’ll come in for a free, no-obligation consultation for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.