If you have experienced a chapter 13 bankruptcy, and are looking to get a mortgage, this guide will inform you of your potential options. It is possible to qualify for a mortgage during or shortly after a Chapter 13 bankruptcy. With 12 months of on-time payments, FHA and USDA loans may be available even before discharge, while conventional loans typically require at least two years of good financial behavior post-bankruptcy.”
Before being eligible to get a new mortgage after a bankruptcy discharge, you will need to satisfy the waiting periods for the type of mortgage you want. The waiting periods are different for various types of mortgage programs. However, you may have an opportunity to get an FHA loan before your discharge date.
We have helped thousands of home buyers to purchase or refinance a home with a Ch 13 bankruptcy. Contact us here to speak with one of our seasoned loan officers to discuss your options and get pre-approved.
Mortgage Options After Chapter 13 Bankruptcy
The primary types of mortgages are conventional loans, FHA loans, VA loans, USDA loans, and non-prime loans. You can view the mandatory waiting periods, along with other loan requirements, for each type of mortgage below.
You will find that your options after a chapter 13 arae different than getting a mortgage after a chapter 7 bankruptcy.
Conventional Loan After Chapter 13 Bankruptcy
Below are some of the basic requirements to get a conventional loan after a chapter 13 bankruptcy discharge:
- The mandatory waiting period to get a conventional loan after a chapter 13 bankruptcy is 2 years.
- Conventional loans require a borrower to have a credit score of 620 or higher.
- The minimum down payment on conventional loans is typically either 3% or 5%.
If your credit scores are below 620, we may still have an opportunity to bump your scores to get your conventional loan approval.
Would you like to see if you qualify for a conventional loan? Click here to discuss your options with no credit pull
FHA Loan After Chapter 13 Bankruptcy
FHA loan guidelines permit borrowers to finance a primary residence while in the midst or immediately after a chapter 13 bankruptcy. Below are some of the basic requirements (according to the FHA 4000.1 handbook) to get an FHA loan after a chapter 13 bankruptcy discharge:
- The FHA will allow a borrower to get a mortgage after 12 months of verified payments during the chapter 13 bankruptcy.
- FHA loans required a borrower to have a credit score of 500 or higher.
- The minimum down payment on FHA loans is 3.5%. However, in order to be eligible for a 3.5% down payment, you must have a credit score of 580 or higher. With a credit score between 500-579, a borrower will need to put 10% down.
With on time chapter 13 bankruptcy payments, you can get approved for a mortgage before your discharge date. Would you like to learn more about the requirements to get an FHA loan?
Or, if you would like to be contacted by one of our loan officers please fill out this form.
VA Loan After Chapter 13 Bankruptcy
Below are some of the basic requirements to get a VA loan after a chapter 13 bankruptcy discharge:
- The mandatory waiting period to get a VA loan after a chapter 13 bankruptcy is 1 year.
- VA loans do not have a minimum credit score requirement. It will depend on the lender’s minimum credit score requirement, which often is around 620.
- VA loans to not require a down payment.
- In order to be eligible for a VA loan, you must be a veteran, or active duty military.
Would you like to see if you qualify for a VA loan? Click here to get pre-approved
USDA Loan After Chapter 13 Bankruptcy
Below are some of the basic requirements to get a USDA loan after a chapter 13 bankruptcy discharge:
- The USDA will allow a borrower to get a mortgage after 12 months of verified payments. This is the same as FHA.
- The minimum credit score required to get a USDA loan is 640. Some applicants may get approved with a lower credit score (as low as 620), but it will require a manual approval.
- USDA loans do not require any down payment.
- In order for a property to be eligible for a USDA loan, the home must be located in a rural area.
Would you like to learn more about the requirements to get a USDA loan?
Non-Prime Loan After Chapter 13 Bankruptcy
Below are the requirements to get a non-prime loan after a chapter 13 bankruptcy discharge:
- Non-prime loans do not require any waiting period after a chapter 13 bankruptcy. This means that you may be able to get a new mortgage even just 1 day after a bankruptcy.
- Most non-prime lenders have a minimum FICO score requirement around 580. However, there are some non-prime lenders do not have any minimum FICO score requirement at all (which means your credit score could be below 500).
- The minimum down payment requirement depends on the lender. Some lenders offer non-prime loans with down payments as low as 10%, but it is common for the minimum down payment to be closer to 20% or higher depending upon your credit scores.
- This option is best if you cannot document your income using tax returns.
Would you like to discuss a non-prime loan option? Click here to speak with us
Refinancing While in Chapter 13 Bankruptcy
One way to get out of your chapter 13 debt payments sooner is to refinance your home. With an FHA refinance, you can cash out up to 80% of the appraised value of the home and use those funds to pay off your chapter 13 debt. Speak with the bankruptcy court trustee before moving forward with this option.
You can also refinance simply to get a lower rate and lower payments. It could lighten your total monthly payments to help while you are still sending payments to the bankruptcy court.
Keep in mind the loan program available while still in chapter 13 is an FHA loan. This means you will have to include the FHA mortgage insurance premium as part of your payment. All will be factored in by a good loan officer when sharing the various options with you.
Manual Underwriting and Compensating Factors
When you are applying for a mortgage, underwriters will need to manually underwrite the file. Rather than just let the automated underwriting system (AUS) review the file, the human underwriter will go through it carefully to make sure that you qualify and meet all of the requirements for an approval with a chapter 13 bankruptcy.
The following compensating factors will help your case when trying to get approved for a mortgage with a chapter 13 bankruptcy:
- Making on time bankruptcy payments
- Stable employment
- Lower debt to income ratios
- Improved credit scores
- Demonstration that you have improved
We have years of experience in securing approvals with a bankruptcy. Let us help you today by contacting us here.
Lenders Who Will Refinance While in Chapter 13
If you are looking to refinance while in chapter 13, we are willing to refinance your mortgage without overlays. Prior to your discharge date, you can get the following refinance options:
FHA Refinance – Whether you have an existing FHA loan or not, you can refinance using a traditional FHA loan to lower your rate or improve the term of your loan. Another reason to refinance is to remove someone from the mortgage. This often occurs when there is a co-signer on the current mortgage or when you are going through a divorce.
FHA Streamline Refinance – With an FHA streamline refinance, your current mortgage needs to be an FHA loan. The benefit of this program is there are no income documents collected and your credit scores are not used for the approval. The only requirement is that you have been current on your mortgage for the past 12 years.
FHA Cash Out Refinance – If you are looking to cash out equity from your home, an FHA cash out refinance is the program that can help while still in chapter 13. The most you can refinance is up to 80% of the appraised value of your home. The guideline still require mortgage insurance even though you will have at least a 20% equity position in the home.
FHA 203k Rehab Loan – When looking to make repairs or improvements in the home, you can refinance with an FHA 203k rehab loan. You will need to hire a licensed contractor to to do the work and the lender will disburse the funds to the contractor as the work is completed. You can borrower more than the home is worth with this program.
Case Study: Mortgage After a Chapter 13 Bankruptcy
With years of experience in helping home buyers with a bankruptcy, the case study below is typical of how the process works:
We received a call from “Amanda” because she and her husband were trying to refinance their home while still making payments as part of their chapter 13 bankruptcy. It is important to note that their mortgage was not part of the bankruptcy.
The rate on their mortgage was about 2 1/2% higher than the prevailing interest rates at that time and they were looking to refinance in an effort to further reduce their monthly payments. Their credit scores were 590 and they had permission from the bankruptcy trustee to proceed with the refinance.
We were able to close the loan in less than 30 days with a $375 monthly payment savings for them.
* See our video on the topic below
FAQ – Recent Chapter 13 Bankruptcy Mortgage
How hard is it to get a loan after Chapter 13 bankruptcy
It is not hard to get a loan after a chapter 13 bankruptcy. FHA loans have the most flexible guidelines and can be done sooner.
How long after Chapter 13 can I buy a house?
You can buy a house after you have made at least 12 on time chapter 13 bankruptcy payments. The only loan program available in this situation is an FHA loan but keep in mind most lenders will make you wait until one year after your discharge. We have the ability to do it much sooner.
How long after Chapter 13 can I get a HELOC?
You will need to wait at least 2 years after your chapter 13 discharge before a lender can provide you with a HELOC.
Can you buy a mobile home while in Chapter 13?
You can purchase a mobile home while in chapter 13 if you plan to make it your primary residence. The other requirement is that you have already made 12 on time chapter 13 bankruptcy payments. We will fit you into an FHA loan to purchase the mobile home.
Can I get a mortgage while still in Chapter 13 bankruptcy?
Yes — FHA loans may be available during Chapter 13 if you’ve made at least 12 consecutive on-time payments, have court permission, and your debts remain manageable.
How long after Chapter 13 discharge can I buy a home with an FHA loan?
Many FHA lenders allow you to apply immediately after discharge, assuming you maintained 12 months of timely payments during the bankruptcy.
What is the waiting period for a conventional mortgage after Chapter 13?
Typically, you’ll need to wait 2 years after discharge and show a clean credit history before qualifying for a conventional loan.
Do VA or USDA loans have shorter waiting periods after Chapter 13?
Yes. A VA loan often requires just 1 year of payment history. USDA may follow FHA timing, allowing for loans after 12 months of payments during bankruptcy.
What credit score do I need after Chapter 13?
Minimums depend on the loan type and lender. FHA loans may accept credit scores as low as 500, though you’ll get better terms with 580+. Conventional often expects 620+.
Can I refinance my existing mortgage while still in Chapter 13?
Yes. Some lenders offer refinancing options even before discharge, especially with FHA refinance programs, subject to court and trustee approval.
What is a non-prime or alternative loan after Chapter 13?
Non-prime lenders don’t always require waiting periods or strict credit scores. These are specialized or higher-risk mortgage loans available to borrowers immediately after bankruptcy.
Are there risks in applying too soon after Chapter 13?
Yes. If your debt-to-income ratio is high or credit remains damaged, you may be denied or face high interest rates. Waiting and rebuilding credit can lead to better offers.
How can I improve my chances of getting approved?
Maintain on-time payments, reduce debt, build cash reserves, avoid new credit inquiries, and possibly use a non-occupying co-signer or build equity in your property.
Will a bankruptcy entry still appear on my credit report even after I rebuild?
Yes. Chapter 13 remains on your credit report for 7 years but its impact lessens over time with good payment history and improved scores.
Can I use gift funds or down payment assistance after Chapter 13?
Often yes, especially with FHA or VA programs. These funds can help you qualify when cash reserves are low.
Does Chapter 13 bankruptcy affect my title or property I already own?
No — bankruptcy doesn’t strip you of property; it affects your debt structure. But any existing mortgage or liens must be accounted for in your plan.
What Others are Saying
Gustan Cho – “Although your mortgage application will need to be manually underwritten, you can absolutely purchase a home while in the midst of a Chapter 13 bankruptcy.”
nolo.com – “Your state could have a first-time homebuyer program to help with your down payment. With the right combination of programs, chances are you’ll be in your new house in no time.”
