Understanding Bankruptcy Types and Mortgage Implications
Chapter 7 Bankruptcy
"Liquidation" bankruptcy - debts are discharged (eliminated)
- ✓ Debts wiped clean
- ✓ Process takes 3-6 months
- ✗ Longer waiting period for mortgages
- ✗ Stays on credit 10 years
Chapter 13 Bankruptcy
"Reorganization" bankruptcy - repayment plan (3-5 years)
- ✓ Keep your assets
- ✓ Shorter mortgage waiting period
- ✓ Can qualify DURING repayment
- ✓ Stays on credit 7 years
FHA Loans After Bankruptcy (Best Option)
FHA loans are typically the best option after bankruptcy because they have the shortest waiting periods and most flexible credit requirements. Here's what you need to know:
FHA After Chapter 7 Bankruptcy
- ✅ Standard waiting period: 2 years from discharge date
- ✅ With extenuating circumstances: 1 year (job loss, medical emergency, divorce)
- ✅ Credit score needed: 580+ for 3.5% down, 500-579 for 10% down
- ✅ Must show: Re-established credit, no late payments since bankruptcy
FHA After Chapter 13 Bankruptcy
- ✅ During repayment: 1 year of on-time payments + court approval
- ✅ After discharge: No additional waiting period!
- ✅ After dismissal: 2 years from dismissal date
- ✅ Benefit: Can buy a home while still in Chapter 13
🎯 Ready to Check Your FHA Eligibility?
Many lenders specialize in post-bankruptcy mortgages. Get pre-approved and see your options!
Check FHA Eligibility After Bankruptcy →5 Steps to Qualify for a Mortgage After Bankruptcy
- Wait the required period - Don't apply too early or you'll be denied
- Rebuild your credit - Get a secured credit card, become an authorized user
- Save for a down payment - 3.5% minimum for FHA, more is better
- Document extenuating circumstances - If applicable, gather proof of job loss, medical bills, etc.
- Get pre-approved with a bankruptcy-friendly lender - Not all lenders are equal!
Non-QM Loans: The "Day 1" Option
If you can't wait 1-4 years, Non-QM (Non-Qualified Mortgage) loans may be an option. These alternative lenders can approve you as soon as 1 day after bankruptcy discharge!
⚠️ Non-QM Loan Trade-offs
Pros:
- ✓ No waiting period
- ✓ Flexible income verification
- ✓ Can use bank statements
Cons:
- ✗ Higher rates (1-3% more)
- ✗ Larger down payment (10-20%)
- ✗ Higher fees
🎯 Compare Post-Bankruptcy Lenders
Get quotes from lenders who specialize in mortgages after bankruptcy. Compare FHA, VA, and Non-QM options!