How Long After Bankruptcy Can I Qualify For A Mortgage Or FHA Loan?

The Federal Housing Authority (FHA) has a two-year rule for allowing a borrower to take on a mortgage after a bankruptcy discharge. Many of the national mortgage companies follow this rule, but not all. Some will allow you to incur mortgage debt almost immediately after a bankruptcy discharge, assuming you meet all their other eligibility requirements. Be warned, however, that these are often less desirable lenders with higher interest rates and more restrictive terms. Some mortgage companies require up to four years to pass after the bankruptcy discharge before they will allow you to incur a mortgage loan.

The time passed is only one consideration that mortgage lenders have. They are also looking at:

Income level: They want to ensure that you can afford the potential mortgage payments.
Income history: They want to ensure that your income has been and will continue to be consistent.
Downpayment: Very simply, the bigger the downpayment, the lower the risk to the lender. The downpayment provides immediate equity for the lender so, if the mortgage is not paid consistently, they can foreclose on the property and recover their money.
Post-bankruptcy credit usage: Mortgage lenders want to see that you have been responsible in how you use credit after you received your bankruptcy discharge.
Other assets: Most importantly, this is having an available “emergency fund” savings account. The lenders want to see that if you do have an interruption in income or a major expense, you will still be able to pay your mortgage obligation.

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