This is a common question for many potential homebuyers: how long will a bankruptcy keep them from buying a home or how long after a foreclosure can a borrower apply for a home loan?

Both of these situations are very unique and different in and of themselves. A bankruptcy is usually due to some catastrophic event as is a foreclosure, however, many bankruptcies do not entail losing a home should you already be a homeowner. A foreclosure, however, means that there is been no communication between a homeowner and the lender and they have simply stopped paying. This could be due to medical bills, a death in the family, a divorce or some other tragedy that is caused the homeowner to stop paying on their mortgage.

But, let’s take each one step-by-step.


In a bankruptcy, there are a couple different common bankruptcies that homeowners can incur. A chapter 13 or a chapter 7 is the most common. A chapter 13 bankruptcy is also called “wage earners plan” and it enables individuals with a regular income to develop a plan to repay all or some of their debt. Most people that choose a chapter 13 will make a plan to repay the debt within 3 to 5 years.

A chapter 7 bankruptcy is total liquidation proceedings in which the debtor’s nonexempt assets are sold by the Chapter 7 trustee and the proceeds are distributed to creditors according to priorities established in the code. Because each of these is quite different, it will determine the eligibility of the borrower’s chance on getting a new loan. If the borrower has conducted a chapter 13, chances are they can most likely qualify for an FHA program quite soon. If the borrower has filed a Chapter 7 bankruptcy, that borrower will need to wait two years from discharge in order to be eligible. Most likely borrowers can reapply for a home loan two years after a bankruptcy if they have built up some good credit.

[Related: Can I Still Buy a House with Bad Credit?]

It also depends on the borrower, the stipulations or reasons behind the bankruptcy and the borrower’s incentive to build good credit as quickly as possible. Bankruptcies can linger on a credit report for up to 10 years and it all depends on how you handle your credit history from the bankruptcy on out. If the borrower chooses to not bill credit it can take up to seven years after a chapter 13 but again, there are many stipulations and variables to each program and situation. The best thing you can do is to simply talk to a lender and discuss the situation and your needs to find out how quickly you can reapply.

[Read more: More differences between Chapter 7 and Chapter 13]


If we are talking about a foreclosure, most borrowers must wait at least three years, which starts from the time the foreclosure case has ended, not when it has begun. This is usually the date that the home was sold in the foreclosure proceeding. This could be anywhere from six months to 12 months after the homeowners stopped paying their mortgage. FHA is usually the option that many distressed homebuyers will turn to as they have fewer requirements and more eligibility. If you’re looking for a conventional loan through Fannie Mae, most borrowers will need to wait seven years after the sale date of the foreclosure. For this reason, most potential homebuyers will build up their credit and apply for an FHA loan.

[Related: Refinancing After a Mortgage Modification]

It’s important to note that a short sale is quite different from either of these two financial distress options. A short sale is where the homeowner is in communication with the lender and agrees to sell the property for less than what the borrower owes. With most lenders,  these borrowers can reapply for a home loan in as little as 1 to 2 years based on their eligibility an incentive for getting things back on track.

Right Choice Mortgage has portfolio lenders that allow us to do home loans immediately, even if you have a recent Bankruptcy, Short Sale, and/ or Foreclosure.

You will need a down payment and/or equity and established income.

 The best thing you can do is call me with your scenario, and I would be very happy to run the numbers and see which loan program is best for you and your future as a homeowner.

Again, one of the best things to do is to simply contact a lender so we can see how best to help!