Bankruptcy Mortgage Guidelines on Waiting Period

In this blog, we will discuss and cover the bankruptcy mortgage guidelines on government and conventional loans. All mortgage loan programs have a mandatory waiting period after bankruptcy and foreclosure. Borrowers need to adhere to Bankruptcy Mortgage Guidelines to qualify for a residential mortgage loan. Learn about the guidelines around the waiting period for FHA, VA, USDA, Conventional, and Non-QM loans after filing for Chapter 7 and Chapter 13 bankruptcies for the year 2025.

In the following sections, we will through the bankruptcy mortgage guidelines. We will cover the various loan programs that are best for you, your family, and your clients for loan officers.

While getting troubles after declaring bankruptcy can be difficult getting mortgage financing, consideration of waiting periods for each mortgage type is essential. This document is meant to provide the most recent bankruptcies mortgage guidelines for the most significant mortgage loan programs.

Bankruptcy Mortgage Guidelines on Waiting Period

If you have undergone a bankruptcy and want to purchase another home, you are not going to be locked out for a long time. However, every loan program has unique bankruptcy mortgage guidelines regarding the waiting period, and the rules differ for Chapter 7 and Chapter 13 bankruptcies.

Bankruptcy mortgage waiting periods for 2025: Complete guide on waiting periods after Chapter 7 and Chapter 13 bankruptcy discharge. Learn requirements for HUD, VA, USDA, Fannie Mae, Freddie Mac, and Non-QM Loans.

Of course, bankruptcies have an effect for some periods of time on mortgage eligibility, sinus it can have an effect on bankruptcies for the life of the bankruptcy. Each of the loan programs, be it government (FHA, VA, USDA) or conventional (Fannies Mae/Freddie Mac), has a waiting period after each bankruptcy discharge and/or dismissal. Waiting period is time after a bankruptcy where borrowers are allowed to be financially responsible to a degree to be able to manage a debt.

Bankruptcy and Mortgage Eligibility

If it were Chapter 7, and/or are targeting bankruptcies toward some loan program discharge on date, waiting periods can be longer. So also some lenders have Non-QM options available which can provide much more flexible waiting periods for those people who are also unable to meet guideline are standard.

Liquidation bankruptcy or Chapter 7 bankruptcy involves the discharging of most unsecured debt. However, the waiting period after Chapter 7 bankruptcy discharge is discharge is different for different loan programs.

FHA loan requires borrowers to wait for 2 years after the discharge of Chapter 7 bankruptcy before becoming eligible to apply for a new mortgage^1^. This two-year waiting period is a policy in most FHA lenders, although there may be some exceptions if the bankruptcy was the result of uncontrollable circumstances.

FHA, VA, and USDA Loan Waiting Periods After Chapter 13

Borrowers Filing Chapter 13 are required to repay the debts while having a repayment plan, which then causes shorter waiting periods rather than Chapter 7 which doesn’t have a repayment plan:

If you have government-backed loans (FHA, VA, and USDA), you need to have made timely payments for a year along with court approval to take on the new debts and then you will have to wait a year after filing for Chapter 13 bankruptcy.

After the Chapter 13 bankruptcy has been discharged, there is no waiting period. Fannie Mae and Freddie Mac can also shorten waiting periods due to extenuating circumstances outside of a borrower’s control, which caused the bankruptcy. These extenuating circumstances are defined as \”nonrecurring events that are beyond the borrower’s control that result in a sudden, significant and prolonged reduction in income, or a catastrophic increase in financial obligations. If so, the waiting period for conventional loans may be shortened to something as lenient as 2 years.

Loan Types Waiting Periods After Chapter 13 Bankruptcy

This guide aims to present to you the waiting period rules 2025 for the following:

• HUD/FHA loans
• VA loans
• USDA loans
• Conventional loans from Fannie Mae and Freddie Mac
• Non-QM mortgage products

We will also explain how lenders truly analyze the file after bankruptcy and how Gustan Cho Associates can facilitate the process, enabling you to achieve homeownership once again with non-QM options that are aggressive and have no lender overlays.

Understanding Bankruptcy Mortgage Guidelines on the Waiting Period

Chapter 7 vs. Chapter 13 in Simple Terms

• Chapter 7 bankruptcy.
• Erases the majority of unsecured debt.
• Typically completed and discharged in about 4-6 months.
• Lenders view it as a full reset, so the waiting period clock begins on the discharge date.

Chapter 13 Bankruptcy

• Over a 3-5 year payment plan, you pay back a portion or all of your debts.
• It is possible to qualify for a mortgage during the plan with court/trustee approval.
• Lenders are focusing on on-time plan payments and the discharge date or dismissal date.

Discharge VS Filing VS Dismissal

• Filing Date: When your case is opened.
• Discharge Date: When the court erases eligible debts.
• Most agency waiting periods start here.
• Dismissal: Bankruptcy case closed without a discharge (often due to missed payments or other issues).
• Long waits after discharge are typically required for conventional loans, unlike after dismissal.

Why Do Lenders Require a Waiting Period

Waiting period (or “seasoning”) exists to:

• Lenders want to see the time since the financial crisis.
• Lenders want to know if you’ve rebuilt your credit and can make new payments.
• In the case of conventional loans, Fannie Mae and Freddie Mac provide detailed guidelines on noteworthy negative credit events, such as bankruptcy.

Waiting Period Guidelines on Bankruptcy from HUD/FHA on Mortgages

After bankruptcy, FHA loans are guaranteed by HUD and are the most lenient agency programs.

How Long Before I Can Get An FHA Loan After Chapter 7 Bankruptcy?

The Basics

• 2-year waiting period starting from the Chapter 7 Bankruptcy Discharge date until you receive your case number.

Special Considerations

• Some lenders may be willing to consider a 12-month waiting period after discharge for special, fully documented cases out of your control, although this is lender-specific.
• FHA expects you to re-establish good credit or at least not incur new derogatory credit during this waiting period.

How Long Before I Can Get An FHA Loan After Chapter 13 Bankruptcy?

FHA is very accommodating for Chapter 13 borrowers:

Still Chapter 13:

• After making 12 months of on-time payments to your Chapter 13 plan, you may qualify for an FHA loan,
• With written approval from your trustee/court, and
• The loan must be manually underwritten.

Post Chapter 13 discharge:

• FHA does not require an additional waiting period as long as you have a sufficiently seasoned discharge for the AUS/underwriter and your credit aligns with FHA policy.
• While it is true that many lenders will require 12–24 months of clean credit, this is not a requirement from HUD, but rather an additional constraint some lenders impose on the loan.
• Gustan Cho Associates adheres to FHA agency guidelines with no overlays, ensuring we follow HUD policy and do not impose additional limits, unlike many lenders.

Guidelines for Bankruptcy Mortgage Waiting Period

Veterans Affairs loans, made available as a benefit to veterans and their surviving spouses, are also very forgiving following a bankruptcy.

Chapter 7 Bankruptcy

• Keeping your debts for 7 years, bankruptcy can sometimes be a necessary option.
• There is a 2-year Chapter 7 waiting period following a bankruptcy discharge that must be observed.
• That is standard for most VA loans.
• Most lenders have longer waiting period laws, but VA loans only wait approximately.
• 2 years.

Chapter 13 Bankruptcy

The VA guidelines for Chapter 13 bankruptcy are similar to those of the FHA.

While still in Chapter 13 Bankruptcy filing:

• You will be eligible after 1 year of on-time planned payments.
• Must have consent from the bankruptcy court and/or trustee in writing, and
• Your case must be manually underwritten.

After Chapter 13 Bankruptcy Discharge:

• You do NOT have to wait any additional time.
• Strong credit and income will enable most borrowers to transition immediately to a VA loan upon completing their bankruptcy plan.
• A lender like GCA, which has no laws or overlays, is likely an extreme advantage for most Chapter 13 borrowers.

USDA Bankruptcy Waiting Period

Most lenders offer USDA loans designed for rural and small-town buyers, which are especially popular because they don’t require any down payment.

USDA Waiting Period After Chapter 7 Bankruptcy

Standard USDA rules:

• A three-year waiting period from the discharge or dismissal of a Chapter 7 bankruptcy is a baseline, indicating that bankruptcy is not considered an adverse credit event.
• Some cases with extreme mitigating conditions may qualify to be considered earlier (as little as 12 or even 15 months).
• However, this usually requires a manual credit exception, and some individuals must demonstrate clean credit that has been sufficiently rebuilt.

USDA Waiting Period in and After Chapter 13 Bankruptcy

While in Chapter 13:

• USDA may approve a loan after 12 months of timely payments,
• With suitable court approval, and
• Subject to having a strong manual underwriting.

After Chapter 13 Discharge:

• Typically, USDA guidance and lender interpretation allow for discharge without an added waiting period, as long as solid credit and income are present.

Other Bankruptcy Mortgage Guidelines (Conventional- Fannie Mae & Freddie Mac)

Conventional loans are subject to rules from Fannie Mae and Freddie Mac and tend to be more strict than FHA/VA/USDA regarding waiting periods.

Fannie Mae Waiting Period After Chapter 7 Bankruptcy

Fannie Mae’s significant derogatory credit events also include:

• Chapter 7 Bankruptcy:  4-year waiting period from discharge or dismissal, or
• 2 years if there are documented extenuating circumstances.

Fannie Mae Waiting Period After Chapter 13 Bankruptcy

For Chapter 13 under Fannie Mae:

• Discharged Chapter 13: 2-year waiting period from discharge date.
• Dismissed Chapter 13: 4-year waiting period** from dismissal date.
• Extenuating Circumstances: In some cases, this can be reduced to 2 years from the date of dismissal.

Freddie Mac Waiting Period After Chapter 7 and Chapter 13 Bankruptcy

Freddie Mac’s Single-Family Seller/Servicer Guide States:

• Chapter 7 or 11: 48 months (4 years) from discharge or dismissal (with potential 2-year reduction in clearly documented extenuating circumstances).
• Chapter 13: 2 years from discharge date.
• 4 years from dismissal (Same as Fannie Mae).
• Conventional loans aren’t accessible while in a Chapter 13 Bankruptcy.
• You must wait until it is discharged, and then you must follow certain seasoning regulations.

Non-QM Bankruptcy Mortgage Guidelines on the Waiting Period

However, here’s the good news for those who have recently filed for bankruptcy.

• Non-QM (non-qualified mortgages) do not adhere to the guidelines set by established entities such as the VA, USDA, Fannie Mae, or Freddie Mac.
• They are considered portfolio loans, and each investor can set their own guidelines.

How Soon After Bankruptcy Can You Get a Non-QM Mortgage?

Many of today’s non-QM programs, including those through Gustan Cho Associates, have the following policy (the applicant can qualify):

• One day out of bankruptcy: Meaning if you have a bankruptcy under Chapter 7, 11, or 13, and you have enough equity to present at closing and demonstrate post-discharge stabilization, you can qualify the day after discharge.
• Some creditors will want 1 month, 6 months, or 12-24 months based on the borrower’s credit, equity position, and type of program.

Common Characteristics of Non-QM After Bankruptcy:

Larger down payments (generally 10-30% or even more) and/or more equity.

• More leniency on credit scores (even as low as 500-600 FICO).
• Alternative income verification through bank statements, DSCR, asset depletion, P&L only, and other documents.
• Suppose you do not want to wait 2-4 years for FHA or conventional seasoning. In that case, non-QM loans allow you to buy or refinance immediately, then refinance into an FHA/VA/conventional loan after you satisfy the agency’s waiting periods.

Factors In Addition to the Bankruptcy Waiting Period

Just because you have completed the bankruptcy waiting period, it does not mean you will be approved automatically.

The lender will still scrutinize the following:

Credit Score and New Credit History

• Payments are made on time after the bankruptcy is discharged.
• No new accounts charged or debt collected.
• Instructions are given for viable new credit or installment loans.

Debt-to-Income Ratio (DTI) and Income Consistency

• Higher DTI is approved if AUS does. FHA, VA, and USDA.
• Conventional loans prefer stronger ratios for automated approvals.

Down Payment, Reserves, and Property Type

• There is less risk with larger down payments and cash reserves.
• There tend to be stricter policies for multi-unit, second-home, or investment properties.

Lender Overlays

• There are stricter policies than the agencies with many banks and big box lenders (Ex, HUD only requires 2 years, but Chapter 7 requires 3-4 years for FHA).
• Gustan Cho Associates is well known for offering **no lender overlays on FHA, VA, USDA, and conventional loans, as well as aggressive non-QM options.

How Gustan Cho Associates Help with Bankruptcy Mortgage Guidelines on Waiting Period

At Gustan Cho Associates, we work with:

• FHA, VA, USDA, and conforming conventional loans **at the published agency guidelines,
• Additionally, numerous non-QM and alternative mortgage programs are available for non-traditional borrowers.

So, that means:

• 2 years out of Chapter 7, we look at FHA/VA first.
• One year into Chapter 13 (with trustee approval), we consider FHA/VA/USDA options.
• If you have just been discharged and do not yet meet agency seasoning requirements, we offer non-QM one-day-out programs for review.
• You can contact Gustan Cho Associates at 800-900-8569 or complete the online form to discuss your specific Chapter 7 or Chapter 13 timeline, your credit profile, and the available mortgage programs that may be suitable for you.

Bankruptcy Mortgage Guidelines Frequently Asked Questions

Gustan Cho Associates are mortgage brokers in 48 states including Washington DC and Puerto Rico. Below are the most popular top frequently asked questions on bankruptcy mortgage guidelines:

• The question is when does waiting period after bankruptcy and foreclosure start? 
• Waiting period after bankruptcy and foreclosure differs depending on the mortgage loan program
• For example, the waiting period after bankruptcy and foreclosure is different for FHA Loans than it is for Conventional Loans

Bankruptcy Mortgage Guidelines On Government Loans

Government Loans are home loans insured by the federal government:

There are three different types of government loans:

1. FHA Loans
2. VA Home Loans
3. USDA Loans

For FHA and VA Loans, there is a minimum of a two year waiting period after Chapter 7 Bankruptcy to qualify. With USDA, the waiting period is three years after Chapter 7 Bankruptcy discharged date to qualify for a USDA loan.

Chapter 7 Versus Chapter 13 Bankruptcy Mortgage Guidelines

The waiting period after Chapter 7 Bankruptcy starts from the discharged date of the Chapter 7 Bankruptcy and not the Chapter 7 filing date. Borrowers in a Chapter 13 Bankruptcy Repayment plan can qualify for an FHA and/or VA loan during repayment plan without the Chapter 13 Bankruptcy being discharged.

There is a one year waiting period after filing Chapter 13 Bankruptcy to qualify for VA and FHA Loans. Borrowers who qualify for an FHA and/or VA loan during Chapter 13 Bankruptcy repayment plan are manual underwriting.

Chapter 13 Bankruptcy Court’s Trustee approval is required. The start date of the waiting period is from the Chapter 13 Bankruptcy file date and 12 months of timely payments needs to be made to qualify for VA and FHA Home Loans. Bankruptcy trustees will approve a housing purchase and/or refinance mortgage transaction without any issues.

FHA Chapter 13 Bankruptcy on FHA and VA Loans

FHA and VA Loans have exactly the same manual underwriting mortgage guidelines. Therefore, qualifying for a home mortgage during and after Chapter 13 Bankruptcy is exactly the same on VA and FHA loans. There is no waiting period requirements after Chapter 13 Bankruptcy discharged date to qualify for an FHA and/or VA loan. If Chapter 13 Bankruptcy discharge has not been seasoned for at least two years, the file needs to be manually underwritten.

For Conventional Loans, there is a two year waiting period to qualify for a Conventional Loan after Chapter 13 Bankruptcy discharged date.

With a Chapter 13 Bankruptcy dismissal, there is a four year waiting period to qualify for a Conventional Loan. The waiting period starts from the Chapter 13 Bankruptcy dismissal date. Gustan Cho Associates are experts in helping borrowers qualify for an FHA and/or VA loan during Chapter 13 Bankruptcy repayment plan. Gustan Cho Associates does not require any waiting period requirements after the Chapter 13 Bankruptcy discharged date. We are experts in manual underwriting on FHA and VA loans.

Waiting Period After Housing Event To Qualify For Government Loans

There is a mandatory waiting period after foreclosure and deed in lieu of foreclosure to qualify for FHA, VA, and USDA Loans. There is a three year waiting period after the recorded date of foreclosure and deed in lieu of foreclosure to qualify for FHA and USDA Loans. The waiting period time clock does not start from the day that the property was surrendered.

The waiting period time clock starts from the date of the sheriff’s sale or from the date the deed to the home was transferred out of the home buyers name and into the lenders name or the new home buyers name. There is a two year waiting period to qualify for VA Loans after foreclosure, deed in lieu, or short sale.

Waiting Period Guidelines on Prior Mortgage Included In Bankruptcy

Homeowners who had a prior mortgage part of bankruptcy and want to qualify for FHA Loans, the waiting period starts from the recorded date of the foreclosure. Not the date of the Chapter 7 Bankruptcy discharged date. This holds true even though the mortgage was wiped off on Chapter 7 Bankruptcy discharge. For homebuyers interested in qualifying for conventional loans and who have a prior Chapter 7 Bankruptcy, there is a four-year waiting period after the bankruptcy discharge date to qualify for a conventional loan.

Fannie Mae and Freddie Mac Bankruptcy Mortgage Guidelines

Homeowners who had a prior mortgage part of bankruptcy, they can qualify for a conventional loan four years after the discharged date of bankruptcy. This is the case even if the foreclosure was recorded at a later date after Chapter 7 Bankruptcy discharged date. The mortgage cannot be reaffirmed after the bankruptcy.

Conventional Loan Waiting Period Requirements After Chapter 13 Bankruptcy

There is a two year waiting period after Chapter 13 Bankruptcy discharged date to qualify for a conventional loan. There is a four-year waiting period to qualify for a conventional loan after a Chapter 13 Bankruptcy dismissal date. Fannie Mae and Freddie Mac do not allow borrowers in an active Chapter 13 Bankruptcy repayment plan to qualify for conventional loans. The Chapter 13 Bankruptcy needs to be discharged and borrowers need to wait two years after the discharged date.

VA Bankruptcy Mortgage Guidelines

VA Bankruptcy Mortgage Guidelines with mortgage part of bankruptcy is as follows:

• If there is a mortgage included in bankruptcy, there is a two year waiting period from the discharged date of bankruptcy discharged date
• The mortgage cannot be reaffirmed
• The date of the housing event does not matter

However, the housing event needs to have been finalized as a foreclosure, deed in lieu, short sale.

USDA Bankruptcy Mortgage Guidelines

USDA Bankruptcy Mortgage Guidelines with mortgage included in bankruptcy is as follows:

• If there is mortgage included in bankruptcy, there is a three year waiting period from discharged date of bankruptcy discharged date
• The date of the housing event does not matter

However, the housing event needs to have been finalized as foreclosure, deed in lieu of foreclosure, short sale.

Conventional Loan Waiting Period Guidelines After Foreclosure

There is a seven-year waiting period to qualify for a conventional loan after a foreclosure.

• There is a four year waiting period after a short sale from the short sale date reflected on the HUD Settlement Statement to qualify for a Conventional Loan
• There is a four year waiting period after deed in lieu of foreclosure to qualify for a conventional loan to qualify for a conventional loan
• The waiting period starts from the recorded date of the deed in lieu of foreclosure and not the date that the keys were surrendered to the lender

FAQs About Bankruptcy Mortgage Guidelines on Waiting Period

How Long is The Waiting Period For a Mortgage Loan Once You File Chapter 7 Bankruptcy?

• For FHA & VA loans, the waiting period is usually 2 years after discharge.
• For the USDA loan, the waiting period is generally 3 years after discharge.
• For Conventional loans (Fannie/Freddie), the waiting period is 4 years from discharge or dismissal.
• However, it can be a shorter timeline (2 years) with extenuating circumstances.
• For Non-QM loans, some programs allow as little as 1 day after discharge with a sufficient down payment and other compensating factors.

How Long Do You Have to Wait After a Chapter 13 Bankruptcy for a Mortgage Loan?

• For FHA & VA loans, you can often get a loan after 12 months of on-time payments with court approval, and no extra waiting period after you discharge the loan.
• For the USDA loan, the waiting period is 12 months into the plan with court approval.
• There is usually no extra wait after you discharge the loan as long as your credit is strong.
• For Conventions loans, the waiting period is usually 2 years from discharge or 4 years from dismissal.
• For Non-QM loans, many programs allow loans AFTER Chapter 13 Bankruptcy and after 12 months of on-time payments during Chapter 13 repayment, or one day after you discharge the loan.

Do Non-QM Loans Really Have No Waiting Period After Bankruptcy?

• Some non-QM programs have no formal seasoning requirement and will consider borrowers immediately after discharge or even while in Chapter 13, as long as they have sufficient equity and a good payment history.
• The trade-off is generally higher interest rates, larger down payments, and more documentation.

Does The Waiting Period Begin From The Date of Bankruptcy Filing or Discharge?

• For almost all loan types, the waiting period begins from the date of bankruptcy discharge, not the filing date.
• Conventional guidelines also consider dismissal dates for longer waits in certain cases.

Can I Obtain an FHA or VA Loan While Still in Chapter 13 Bankruptcy?

• Yes, it’s possible.

FHA and VA both allow financing during an active Chapter 13 once you have:

• 12 months of on-time plan payments,
• Trustee/court approval, and
• A solid manual underwriting approval from the lender.

What if My Lender Has Additional Waiting Periods?

• These are referred to as lender overlays.
• For example, if a bank requires 4 4-year waiting period after Chapter 7 for FHA, that’s their rule, not HUD.
• A lender like Gustan Cho Associates, who has no overlays on government and conventional loans, sticks to the published agency guidelines instead of adding additional waiting periods.

Should I Wait For FHA/VA/Conventional To Use Them, or Should I Use Non-QM Now?

• This is a matter of how quickly you need to buy or refinance or how much down payment/equity you have, as well as your credit score, income stability, and if it makes sense to pay a higher non-QM rate for a couple of years if you intend to refinance to an agency loan after the waiting period.
• A thorough analysis with a loan officer who has experience with bankruptcies can help to identify the best route for you.

Mortgage Experts on Home Loans After Bankruptcy

First-time home buyers and/or seasoned home buyers looking for a national mortgage company licensed in multiple states with no overlays on government and conventional loans please contact us at Gustan  Cho Associates at 261-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates takes pride in having a national five star reputation of being a one-stop mortgage lending shop. We have every available non-QM and alternative finance mortgage loan program in the country. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.