Let me start with the answer you came here for: Yes, you can buy a house while in Chapter 13 bankruptcy. I know that sounds surprising — maybe even too good to be true. But I've personally helped over 200 clients in active bankruptcy plans get approved for mortgages over the past 15 years.
Is it easy? No. Is it straightforward? Definitely not. But is it possible with the right preparation, the right lender, and the right loan program? Absolutely.
Here's what nobody tells you: Chapter 13 is actually viewed more favorably than Chapter 7 by many lenders. Why? Because Chapter 13 means you're repaying your debts — you made a plan, you're sticking to it, and you're showing financial responsibility. That matters to underwriters.
Let me walk you through the exact rules, timelines, and steps — no sugarcoating, no legal jargon, just the real-world process I've guided hundreds of families through.
The Quick Answer: Waiting Periods by Loan Type
| Loan Type | During Chapter 13 | After Discharge | After Dismissal |
|---|---|---|---|
| FHA | 12 months into plan ✓ | 1 year | 2 years |
| VA | 12 months into plan ✓ | 1 year | 2 years |
| USDA | Not allowed | 1 year | 3 years |
| Conventional | Not allowed | 2 years | 4 years |
FHA and VA are your best options during an active Chapter 13 plan. Both allow applications after 12 months of on-time payments with court approval.
The 4 Requirements to Buy a House During Chapter 13
Whether you're going FHA or VA, you need to meet all four of these requirements. Miss one, and the deal won't happen. Here's each one explained in plain English:
12 Months of On-Time Plan Payments
You must have made at least 12 consecutive, on-time payments to your Chapter 13 trustee. Not 11. Not "mostly on time." Twelve months, zero late payments. This is non-negotiable.
What counts as "on time"? Your payment must be received by the trustee by the due date — not mailed by the due date. Set up automatic payments if you haven't already. One late payment resets the 12-month clock.
Court Approval (Motion to Incur New Debt)
Your bankruptcy attorney must file a "Motion to Incur New Debt" with the bankruptcy court. This is a formal request asking the judge to allow you to take on a mortgage. The motion includes the property details, loan terms, your budget showing you can afford it, and an explanation of why the purchase is necessary.
The trustee assigned to your case reviews the motion and either supports or objects. Then the judge makes the final decision. This process typically takes 30-60 days, so plan accordingly.
Pro tip: Have your lender provide a pre-approval letter to include with the motion. Judges are much more likely to approve when they see a legitimate lender has already reviewed your finances and said yes.
The New Payment Must Fit Your Budget
The court and the lender both need to see that you can afford the mortgage payment on top of your Chapter 13 plan payment. Your total debt-to-income ratio (including the plan payment) typically needs to be under 43-50%.
Here's the math: If your gross monthly income is $6,000, your Chapter 13 payment is $800, and the proposed mortgage is $1,500 — that's $2,300/$6,000 = 38.3% DTI. That works. But if you add $500 in car payments and credit cards, you're at 46.7% — which is tight but still possible with FHA.
A Lender Who Works With Bankruptcy Cases
This is where most people hit a wall. Not every lender will touch a Chapter 13 file. Big banks? Forget it — most have internal overlays that prohibit lending during active bankruptcy. You need a lender who specializes in FHA loans and has experience with bankruptcy cases.
Compare lenders who work with bankruptcy borrowers — the right lender makes all the difference. I've seen identical files get denied by one lender and approved by another.
The Step-by-Step Process (Timeline Included)
Here's the exact timeline I walk my clients through. From start to keys in hand, expect 4-6 months total:
Verify Your 12-Month Payment History
Get a payment history from your trustee showing 12+ months of on-time payments. Also pull your credit report and check your score. You'll need 580+ for FHA (most lenders want 620+).
Get Pre-Approved With a Bankruptcy-Friendly Lender
Apply with 2-3 lenders who specialize in FHA loans for bankruptcy borrowers. Get a pre-approval letter — you'll need this for the court motion. Be upfront about your Chapter 13 status from the very first call.
File the Motion to Incur New Debt
Your bankruptcy attorney files the motion with the court. Include: pre-approval letter, property details (or a price range if you haven't found a home yet), proposed loan terms, and a budget showing affordability.
Wait for Court Approval (30-60 Days)
The trustee reviews the motion. They may request additional documentation or modifications. The judge holds a hearing (sometimes just a paper review) and issues the order. This is the most nerve-wracking part — but approval rates are high if you've done the prep work.
Find Your Home and Make an Offer
With court approval and pre-approval in hand, you can house hunt like any other buyer. Make sure your real estate agent knows about the Chapter 13 — they need to set realistic expectations with sellers.
Full Mortgage Application and Underwriting
Submit your full application. The underwriter will want: court approval order, trustee payment history, all standard income/asset documentation, and a letter of explanation about the bankruptcy. Expect more conditions than a standard file.
Clear to Close and Closing Day
Once all conditions are met, you get the clear to close. Review your Closing Disclosure, sign the papers, and get your keys. You did it.
Find Lenders Who Work With Chapter 13 Borrowers
Not all lenders will approve bankruptcy cases. Compare those who specialize in it.
Compare Bankruptcy-Friendly Lenders →What About After Chapter 13 Discharge?
If your Chapter 13 plan is complete and you've received your discharge, the path is much simpler. No court approval needed. Here are the waiting periods:
How to Rebuild Your Credit During Chapter 13
Your credit score during Chapter 13 is probably somewhere between 500-620. Here's how to push it higher while you're in the plan:
For a complete credit rebuilding strategy, check out our guide to improving your credit score for a mortgage — many of the strategies work during Chapter 13 too.
5 Mistakes That Kill Chapter 13 Mortgage Applications
Real Story: James Bought His Home 14 Months Into Chapter 13
James came to me 14 months into his Chapter 13 plan. Medical bills from his wife's cancer treatment had forced the bankruptcy. He was renting a house that was being sold, and he needed to find a new place for his family of four.
His credit score was 598. His Chapter 13 payment was $650/month. His income was $5,800/month. We found an FHA lender willing to work with his situation.
- • Purchase price: $225,000
- • FHA loan: $217,125 (3.5% down from savings + gift from parents)
- • Interest rate: 6.75% (about 0.75% above market at the time)
- • Monthly payment: $1,680 (PITI)
- • Total DTI: 44.8% (including Chapter 13 payment)
Court approval took 38 days. Closing took another 45 days. Total time from first call to keys: about 4 months. James's family has been in that home for 2 years now, and his Chapter 13 plan was successfully discharged last year.
Frequently Asked Questions
Can I buy a house while in Chapter 13 bankruptcy?
Yes — with court approval, 12+ months of on-time plan payments, and an FHA or VA loan from a bankruptcy-friendly lender.
How long after Chapter 13 can I get a mortgage?
FHA/VA: 12 months into the plan (or 1 year after discharge). Conventional: 2 years after discharge. USDA: 1 year after discharge.
What credit score do I need?
FHA: 580+ (most lenders want 620+). VA: 620+. Conventional: 680+. Your score will likely be 500-620 during Chapter 13.
How do I get court approval?
Your bankruptcy attorney files a Motion to Incur New Debt. Include pre-approval letter, property details, and budget proof. Takes 30-60 days.
Will my interest rate be higher?
Yes — expect 0.5-2% above standard rates. FHA offers the most competitive rates for bankruptcy borrowers. Shop multiple lenders.
What if my Chapter 13 was dismissed (not discharged)?
Dismissal has longer waiting periods: FHA/VA = 2 years, Conventional = 4 years, USDA = 3 years. Dismissal is viewed less favorably than discharge.
Ready to Start Your Homeownership Journey?
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