You’ll find that the rules regarding loan approval after a bankruptcy are steeped in common sense and undergirded by two overriding principles:

1. The circumstances that led to the bankruptcy (huge medical expenses, job loss, excessive debt, divorce, unexpected expenses, etc.) must no longer exist.
2. Enough time has passed since the bankruptcy for you to get back on your feet and reestablish your credit with consistent on-time payments over a period of time.

Waiting Periods

Second date? Second week? Second month? 

Well, none of the above. For bankruptcies it’s more like the second year. More specifically, depending on the type of loan program and whether you filed a Chapter 7 or Chapter 13, the time you must wait to apply for a mortgage after bankruptcy ranges from 1 – 4 years. Here’s the scoop:

Conventional Loans: The general rule is four (4) years from the date of discharge or dismissal. However, in the presence of extenuating documentable circumstances, the waiting period is two (2) years from the date of discharge or dismissal. If you filed a Chapter 13 it’s two (2) years from the discharge date, or four (4) years from the dismissal date. 

FHA Loans: If you filed a Chapter 7 bankruptcy, you can apply for an FHA mortgage two (2) years after the discharge date (assuming no late payments after the bankruptcy and no new debt), and one (1) year if you can demonstrate the bankruptcy was beyond your control. If you filed a Chapter 13 bankruptcy, you can apply for an FHA mortgage after making payments to the court for one (1) year, and obtaining the court’s permission to incur a mortgage debt.

VA Loans: If you filed a Chapter 7 bankruptcy, you can apply for a VA mortgage two (2) years after the discharge date (assuming no late payments after the bankruptcy). If you filed a Chapter 13 bankruptcy, you can apply for a VA mortgage after making payments to the court for one (1) year, and obtaining the court’s permission to incur a mortgage debt.

USDA Loans: If you filed a Chapter 7 bankruptcy, you can apply for a USDA mortgage three (3) years after the discharge date (assuming no late payments after the bankruptcy). With USDA the general waiting period isn’t enforced as strictly as it is with other loan programs. If USDA’s automated underwriting system Accepts the application, or Refers the application for manual underwriting your application may be approved without having to wait three (3) years. If you filed a Chapter 13 bankruptcy, you can apply for a USDA mortgage after making payments to the court for one (1) year, and obtaining the court’s permission to incur a mortgage debt. Unlike other loan programs, USDA underwriters can approve your mortgage application without the court’s permission if it’s deemed an acceptable credit risk.

Specialty Loan Products featured by SLG: If you filed a Chapter 7 bankruptcy, you can apply for a SLG Specialty Loan Product one (1) year after the discharge date (assuming no late payments after the bankruptcy). In addition, some of our loan programs require NO waiting period after the discharge of a Chapter 7 bankruptcy. If you filed a Chapter 13 bankruptcy, you can apply for a Specialty SLG mortgage after making payments to the court for two (2) years.