FAQ: Getting a Mortgage after Filing for Bankruptcy

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Understandably, the biggest concern that many people have about filing for bankruptcy is how it may hinder their ability to get a mortgage in the future.

To provide clarity and reduce anxieties that are based on myths and misinformation — and unfortunately there is a great deal of both floating around the web — below we answer some frequently asked questions about getting a mortgage after bankruptcy:

Question: “Do I need to wait until a bankruptcy filing is removed from my credit score before I get a mortgage?”

Answer: No, you do not. If your bankruptcy was caused by reason(s) beyond your control, then you should be able to apply for a mortgage two years after discharge. If your bankruptcy was the result of financial mismanagement on your part, then you will be able to apply for a mortgage four years after discharge.

Question: “Does a bankruptcy filing make me ineligible for federal housing loan programs?”

Answer: No, your eligibility is not affected. However, you will have to abide the required waiting period. For example, if you wish to apply for a Federal Housing Authority (FHA) loan, then you will need to wait two years after discharge. Or if you wish to apply for a United States Department of Agriculture (USDA) loan, the waiting period is three years (for chapter 7 filings) and one year (for chapter 13 filings).

Question: “Are there any exceptions to the two-year post-discharge waiting period before applying for an FHA loan?”

Answer: Yes, there is. You may be able to apply for an FHA loan less than two years after discharge if you meet two conditions: 1) your bankruptcy was not the result of financial mismanagement on your part (e.g. you were forced to cover excessive medical bills or major home repairs after a natural disaster); 2) since filing for bankruptcy, you have behaved in a financially responsible and prudent manner.

Question: “Will conventional lenders make me pay more for a mortgage based on my bankruptcy filing?”

Answer: This depends. Conventional lenders (a.k.a. private lenders) rely on a variety of factors to determine lending rates, including — but not exclusively — credit scores and bankruptcy filings. With this being said, all lenders (banks and private organizations) are governed by Federal and State guidelines that forbid predatory lending practices, discrimination, and other transgressions.

Generally speaking, if you pay less than a 20% down payment on your home, then you’ll be required to pay mortgage insurance (contrary to what some people believe, the government does not insure private conventional mortgages). However, once you have 20% equity in your home, the insurance payment should drop or be eliminated.

Learn More

To learn more about getting a mortgage after bankruptcy, contact the Law Office of Charles Huber today. We have over 30 years of experience filing consumer bankruptcy cases. Our experience is your advantage!

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