How long after bankruptcy can I get a conventional mortgage?

Conventional loans backed by Fannie Mae or Freddie Mac require a 4-year waiting period after Chapter 7 discharge and 2 years after Chapter 13 discharge. With documented extenuating circumstances, the Chapter 7 wait may be reduced to 2 years.

Is a conventional loan better than FHA after bankruptcy?

If you have waited 4+ years, have a 680+ credit score, and can put 20% down, conventional is significantly better - no mortgage insurance saves $100-300 per month. For shorter waits or lower scores, FHA is the better option.

Conventional Mortgages After Bankruptcy - Fannie Mae and Freddie Mac | buyahouseafterbankruptcy.com

Waiting periods

Scenario	Fannie Mae	Freddie Mac
Chapter 7 - standard	4 years after discharge	4 years after discharge
Chapter 7 - extenuating	2 years after discharge	2 years after discharge
Chapter 13 - standard	2 years after discharge	2 years after discharge

Extenuating circumstances: Fannie Mae defines these as nonrecurring events beyond the borrower's control - serious illness, job loss due to employer closure, or divorce. Documentation and a letter of explanation required. Minimum 10% down payment.

Advantages of conventional loans

No mortgage insurance with 20% down - FHA charges MIP for life; conventional PMI drops off at 80% LTV
Lower rates at higher scores - with 740+, conventional rates beat FHA by 0.25% to 0.5%
Higher loan limits in most areas
No upfront funding fee - unlike FHA (1.75%) or VA (2.15%)
More property types - condos, investment properties, second homes

When conventional beats FHA

Score 680+ with 10-20% down: Conventional wins. PMI is cheaper than FHA MIP.
Score 740+ with 20% down: Dramatically better. No PMI, lowest rates.
Score 580-679 with 3.5% down: FHA wins.
Within 2 years of discharge: FHA or VA only.

Preparing for conventional

Years 1-2: Rebuild credit with secured cards and credit builder loans
Years 2-3: Add unsecured card and possibly small auto loan
Years 3-4: Maximize savings for 20% down to avoid PMI
Year 4: Get pre-approved 60-90 days before house hunting

The wait is worth it. No mortgage insurance on a $250,000 home saves $150 to $300 per month - that is $54,000 to $108,000 over 30 years. If you can wait the extra 2 years beyond the FHA timeline, conventional often makes better financial sense.

Waiting periods

Advantages of conventional loans

When conventional beats FHA

Preparing for conventional

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