Buying a home after bankruptcy

Waiting periods usually run from the discharge or dismissal date, and program rules change, so treat these as general guides and confirm with your loan consultant:

• Conventional: often 4 years after a Chapter 7 discharge
• FHA: often 2 years after a Chapter 7 discharge
• VA: often 2 years after a Chapter 7 discharge
• Chapter 13: often shorter, and some programs allow a loan during the plan with the trustee's approval

Chapter 7 wipes out most debts quickly, so lenders usually want more time afterward to see a new track record.

Chapter 13 sets up a repayment plan over several years. Because you've been making steady payments, some programs let you qualify sooner. A record of on-time plan payments helps.

Some programs shorten the wait for extenuating circumstances: events outside your control, such as a serious illness, a job loss or the death of a wage earner. You'll need documentation showing what happened and that it's behind you.

• Pay your bills on time, including rent and utilities
• Open a secured card or a small credit-builder loan and keep the balance low
• Check your credit reports and dispute any debts still showing as owed after discharge
• Build savings for a down payment and reserves

Lenders typically ask for your bankruptcy papers, including the discharge or dismissal, plus a letter explaining the cause and what has changed. Clear, honest answers make the review smoother.

While you wait, build savings in a separate account. Lenders like to see a down payment and a cushion of reserves that has sat in your account for a couple of months, with deposits you can explain. Steady savings also show the new habits a lender is looking for.

You need a credit score of at least 620 for a CapCenter loan. Pre-approval starts with a soft credit check, which doesn't affect your score, so you can see where you stand before the waiting period ends.