How long after bankruptcy can I apply for a mortgage?

By Sabrina Karl

Bankruptcy is a serious financial event that can leave you feeling its impacts for years after filing. But that doesn’t mean you can’t ever apply for a mortgage again. You just have to understand what timing is realistic, and what smart moves to make while you wait.

The first thing to know is that there will be a waiting period, starting at your bankruptcy’s discharge or dismissal date, not the filing date. But the length of that period varies according to whether you filed for Chapter 7, 11, or 13 bankruptcy, and what type of mortgage you’re considering.

Depending on your situation, you’ll need to wait at least one year, and usually two, but perhaps 3-4 years. If you’ve filed more than one bankruptcy, or have also undergone a home foreclosure, the period may be extended up to seven years.

Fortunately for some, if your bankruptcy involved extenuating circumstances, like a one-time income hit from job loss, divorce, or medical bills, you may be able to shorten your wait.

But even after the period concludes, the mortgages you’ll qualify for may not have very favorable rates. That’s why it’s important to play it smart during your waiting period.

First, you’ll want to build up your credit history, establishing an on-time payment track record for at least 12 months and not using your full credit limit (aim for using less than 30 percent).

Second, save as much for a down payment as possible. The more funds you can put down on a new house after bankruptcy, the better the mortgage deal you’ll be able to secure.

Bankruptcy can certainly complicate or delay securing a new mortgage. But focusing on your credit score and down payment savings while you wait for the green light is your best path toward a new home.