Can I buy a home after bankruptcy?

One of our most common questions on our bankruptcy forum is, “Can I buy a house after I file for bankruptcy?” Owning a home has long been considered the great American dream (although with depreciating home values and depressed economies in cities throughout the United States many are now wondering if Americans should find a new dream).  But let’s assume you live in a thriving city and you have always wanted a home, if you have had to declare bankruptcy you may be wondering if this might still be an option for you considering that evidence of your bankruptcy filing will remain on your credit report for seven to ten years.

Getting a home after filing bankruptcy

It should be noted that many lenders will not be willing to loan money to you within a specific time period following your bankruptcy. If a lender is willing to loan you money right away expect to pay a substantial down payment and very high interest rates. Most lenders will make you wait, and the wait could be as long as two to three years. During this waiting period it is important that you take all the necessary steps to begin to clear your credit report and re-establish good credit.

Additionally, mortgage lenders will also review a variety of other financial factors: employment history, your income, your debt to income ratio and the value of the home you are considering prior to deciding to loan you money.

Steps to get a home loan:


  1. Begin immediately to re-establish your credit. This can include paying your bills on time, getting a secured credit card and making timely payments, and validating that all discharged debts have been eliminated from your credit report.
  2. Begin to save money for a down payment. As mentioned above, if you have filed bankruptcy you can expect to pay a larger down payment when you borrow money.
  3. Be patient and persistent. Finding the right lender may be tough. Talk to family members and friends who have had the same financial issues and find out who was willing to work with them. Try talking to traditional lenders as well as online lenders who may specialize in helping post bankruptcy clients.
  4. Pay all of your bills on time and be careful about defaulting on any type of loans or receiving a charge-off. Charge-offs can occur in as little as 120 to 180 days if you fail to make debt payments.
  5. Keep your loan and credit card accounts open but maintain low limits which do not exceed 30% of your maximum loan limit.
  6. Understand that you may have to provide more information to the lender than a traditional home buyer. For instance, you may be required to provide 2 years worth of tax returns, bankruptcy information, a list of your assets and information about your salary.

Other options if you cannot buy a home


If you have declared bankruptcy and you are not able to purchase a home this may be a blessing in disguise. How many homeowners have struggled for years to sell a home in depressed areas of the nation such as Florida or California? Thousands more are paying for homes which are underwater, and they owe much more on their mortgage than their home is currently worth. If you cannot buy a home, consider other alternatives such as renting. Bide your time and save your money. You may just find a new dream.

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Beth L. is a content writer for Better Bankruptcy. Good content and information is one of many methods we utilize to bring you the answers you need.