Many people ask whether a bankruptcy or a foreclosure ruin their chances of ever obtaining a mortgage for a future home.  While there are a lot of factors that go into the decision to approve someone for a mortgage, such as income and credit score, both bankruptcy and foreclosure serve only as temporary roadblocks to the goal of obtaining a mortgage.

Waiting Periods:

Each type of mortgage loan has its own specific waiting period after a bankruptcy.  While a foreclosure (either before or after bankruptcy) may affect these waiting times, generally speaking, debtors with a bankruptcy must wait the following times to satisfy part of the underwriting guidelines for the following types of mortgage:

  • FHA Loans: 2 years
  • VA home loans: 2 years
  • USDA home loans: 3 years
  • Conforming Mortgages (such as Fannie Mae or Freddie Mac): 4 years

These waiting periods begin on the date the debtor receives a discharge, not the filing date of the bankruptcy petition.

If a foreclosure occurs before the bankruptcy case, then, generally speaking, the above waiting periods apply.  If the foreclosure occurs after bankruptcy, then a debtor may have to wait a little bit longer than the times listed above.  For example, for FHA loans, the waiting period is three (3) years from the date of a foreclosure, 1 year longer than if the debtor simply had a bankruptcy without a foreclosure.  There are some exceptions to the waiting times and so it is best to contact the lender to discuss your particular situation in more detail.