Can You Buy a House After a Bankruptcy?

Posted by Allison Van Wig on Thursday, November 21, 2019 at 1:11 PM By Allison Van Wig / November 21, 2019 Comment

If you’re like many people, you know what it’s like to struggle financially - and if you have a bankruptcy in your past, you might be wondering if you can even buy a home. About 800,000 Americans file for bankruptcy every year… but the good news is that eventually, many end up qualifying to buy homes.

Here’s what you need to know about buying a home after bankruptcy.

Can You Buy a House After a Bankruptcy?

There are two ways a person can file bankruptcy: by using Chapter 7 of the Bankruptcy Code or using Chapter 13 of the Bankruptcy Code. Under Chapter 7, people are generally released from the obligation to repay debt - but with Chapter 13, debtors do have to make repayments.

But while those are the basics, what you really need to know is whether you can buy a house after bankruptcy. The answer is yes - after some time has passed.

How Long Do You Have to Wait After Bankruptcy to Buy a Home?

Typically, people need to wait about two years after a bankruptcy. That’s usually the soonest a lender will consider your loan application. Sometimes, though, it’s four years. It depends on the person’s credit score (which takes a big hit from bankruptcy) and the type of loan they’re applying for. (The exception: FHA loans, which only have a minimum one-year “seasoning period” after bankruptcy.)

Reestablishing Your Credit After Bankruptcy

Reestablishing your credit after bankruptcy is kind-of like starting from scratch. Lenders will be scouring your credit report. Sometimes financial experts recommend that you open a secured line of credit - like a credit card from your bank - and make all your payments on time for at least a year before you begin applying for other types of credit.

Before You Apply for a Mortgage

Make sure you check your credit report and take all the steps you can to boost your score before you apply for a mortgage. That way, you’ll qualify for the best possible terms and rates from your lender. (That’s true with or without a bankruptcy in your past.)