FHA waiting periods
The Federal Housing Administration (FHA) has specific waiting periods after bankruptcy before you can qualify for an FHA-insured mortgage:
| Bankruptcy Chapter | Waiting Period | Clock Starts From |
|---|---|---|
| Chapter 7 | 2 years | Date of discharge |
| Chapter 13 (during plan) | 12 months of on-time payments | Date plan payments began |
| Chapter 13 (after discharge) | No additional wait | Eligible immediately at discharge |
These waiting periods are set by HUD Handbook 4000.1 (the FHA Single Family Housing Policy Handbook). Individual lenders may impose longer "overlays" but cannot shorten the federal minimum.
FHA requirements after bankruptcy
- Credit score: 580 minimum for 3.5% down. 500-579 requires 10% down.
- Re-established credit: At least 2 active tradelines with 12+ months of on-time payments. A secured credit card plus a credit builder loan satisfies this.
- Debt-to-income ratio: Front-end (housing costs) below 31%. Back-end (all debts) below 43%. Higher ratios possible with compensating factors.
- Employment: 2 years of verifiable employment history.
- Down payment: 3.5% of purchase price. Can come from savings, gifts, or down payment assistance programs.
- No late payments since discharge: Any late payment after bankruptcy is a major red flag for FHA underwriters.
Chapter 13 -- buying during your plan
FHA is one of the few programs that allows you to buy a home during an active Chapter 13 plan. The requirements are:
- At least 12 months of on-time plan payments
- Written approval from the Chapter 13 trustee
- Court approval (the trustee typically files a motion)
- Proof that you can afford both the mortgage and the plan payment
- Meeting all other FHA requirements (credit score, DTI, employment)
11 U.S.C. § 1305: Allows a proof of claim for post-petition debts in a Chapter 13 case. This is the statutory basis for the trustee's authority to approve a mortgage during the plan period.
FHA mortgage insurance
FHA loans require mortgage insurance premiums (MIP) -- both an upfront premium (1.75% of the loan amount, typically rolled into the loan) and an annual premium (0.55% of the loan balance, paid monthly). For most post-bankruptcy buyers putting down 3.5%, the annual MIP lasts for the life of the loan.
This is the main tradeoff with FHA. The easier qualification requirements come with higher long-term costs. Once you reach 20% equity and have a 680+ credit score, consider refinancing into a conventional loan to eliminate mortgage insurance.
FHA exists to help people like you. The program was specifically designed to expand homeownership to borrowers who do not qualify for conventional financing. A bankruptcy filing does not permanently exclude you -- it just requires a 2-year demonstrated recovery period. Start rebuilding credit now, and you could be pre-approved in 24 months.