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Buy A Home After Bankruptcy or Foreclosure or BOTH

Demystifying the untruths about buying a home after bankruptcy or foreclosure, or BOTH!

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If homeownership is a dream of yours, bankruptcy or foreclosure do not have to be major setbacks.

Today we’ll discuss your options after bankruptcy or foreclosure, the waiting periods, types of loan options available, and what a lender is looking for to get you approved.

We get it, life happens, but know that your dream of homeowners can be a reality! You do not have to rent the rest of your life.

Buying After Bankruptcy

The most common forms of bankruptcy are Chapter 7 and Chapter 13. The type of bankruptcy you experience will determine the length of time you have to wait (also known as your “seasoning period”) to be eligible for a new mortgage loan, as well as the loan product (type of loan) available to you.

Different mortgage programs can have different “seasoning periods” following a bankruptcy or foreclosure, and each Lender may have their own in-house requirements on top of those seasoning periods.

Chapter 7 bankruptcy

With Chapter 7 bankruptcy, the seasoning clock begins when the action is discharged.

  • 2 year wait (seasoning period) for FHA or VA
  • 3 yr wait (seasoning period) for RD
  • 4 year wait (seasoning period) for conventional loans 

Chapter 13 bankruptcies

Chapter 13 bankruptcies have a slightly different seasoning period.

  • 4 yr wait (seasoning period) for conventional
  • 3 yr wait (seasoning period) for RD
  • 1 yr wait (seasoning period) for FHA or VA, but you’ll need to show at least 12 consecutive months of on-time payments and permission from the court to take on new debt.

Buying After Foreclosure

Individuals who lose a home to foreclosure can face a longer wait. Foreclosure alternatives (short sales and deeds-in-lieu of foreclosure) and even loan modifications can also trigger seasoning periods.


  • 2 yr wait (seasoning period) for VA loan
  • 3yr wait (seasoning period) for FHA or RD from a foreclosure or short-sale
  • 4 yr wait (seasoning period) for short-sale or deed-in-lieu, unless there were extenuating circumstances
  • 7 yr wait (seasoning period) from the foreclosure date for conventional loans
    • Borrowers who can show the foreclosure resulted from circumstances truly beyond their control may be able to qualify after three years. But you’ll also need to make a down payment of at least 10%

Caveat: While government-backed loans provide more flexibility regarding foreclosure, there is a wrinkle worth noting. If your foreclosure occurred on one of these loans (FHA, VA or USDA), you might face an automatic three-year wait before being eligible for another.

Bankruptcy & Foreclosure

If you unfortunately find yourself in the boat where you file for both bankruptcy and then go through a foreclosure a few years later, there will be two different seasoning periods to consider. How lenders view this can depend on their guidelines and the type of home loan you’re seeking. Generally, it’s a matter of when you’re no longer legally responsible for the mortgage debt. If it’s truly discharged in the bankruptcy, lenders can essentially disregard the subsequent foreclosure or short sale. You’re not going to be “double hit” with another seasoning period. However, whether you can still qualify from a credit standpoint will be your biggest hurdle.

Buying a home after Bankruptcy

To start the mortgage process, lenders require a detailed letter explaining why you needed to file for bankruptcy in the first place. Ideally, the bankruptcy would have been caused by an extenuating circumstance beyond your control—such as the death of an income-contributing spouse, the loss of employment, or a serious illness.

In other words: A lender likes to see that you were hit with hard times that had a significant negative impact on your expenses or income, and made it impossible to meet your financial obligations. What a lender won’t want to see is someone with a die-hard shopping habit or a nonchalant attitude toward paying credit cards on time. If that is your situtation, you’ll have to prove you’ve changed.

Whatever the reason you filed for bankruptcy, lenders will need to properly document your extenuating circumstances, so be prepared to provide proof detailing your life event. Medical bills, a doctor’s note, a death certificate, or severance paperwork are all acceptable evidence that prove to lenders that you are a safe bet worthy of a home loan.

Rebuilding credit after Bankruptcy or Foreclosure

During your “seasoning” (waiting) period, buyers should be focused on rebuilding their credit. If you have experienced either of these situations (bankruptcy or foreclosure) and want more information on how to improve your credit, or see if you have an extenuating circumstance and get can approved to buy today give us a call at 504-509-4771, or complete the contact form below.

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