Apply
FHA Loan After Bankruptcy or Foreclosure

FHA Loans After Bankruptcy, Foreclosure, or Short Sale

A bankruptcy or foreclosure doesn’t end your ability to get a mortgage. It starts a clock. FHA’s waiting periods are the shortest of any mainstream program, which is why FHA is where most people end up after a financial reset.

The waiting periods

Event FHA Waiting Period Measured From
Chapter 7 bankruptcy 2 years Discharge date
Chapter 13 bankruptcy 1 year into repayment, with court permission; or 2 years after discharge Filing date or discharge date
Foreclosure 3 years Date the foreclosure completed (deed transferred)
Short sale 3 years Date of the sale
Deed in lieu of foreclosure 3 years Date of the deed transfer
For comparison, conventional loans generally require four years after Chapter 7 and seven years after foreclosure. FHA’s timelines are roughly half.
01

Chapter 7

Two years from the discharge date, not the filing date. That distinction matters because Chapter 7 cases can take several months to discharge.
During those two years, FHA wants to see that you’ve re-established credit responsibly. That means:
  • No new late payments
  • At least one or two credit accounts opened and paid on time
  • No new collections or judgments
A borrower who filed Chapter 7, got discharged, and then opened nothing and paid nothing for two years has technically satisfied the waiting period but has no evidence of recovery. That file is harder than one with a secured credit card and a car loan showing 18 months of clean payments.
02

Chapter 13

Chapter 13 is a repayment plan, and FHA treats it differently. You can qualify while still in the plan, after 12 months of on-time plan payments, with written permission from the bankruptcy court to take on new debt.
Or, after the plan is completed and discharged, there’s no additional waiting period beyond the two-year Chapter 7 standard measured from discharge.
Getting court permission takes time. If you’re in a Chapter 13 and want to buy, start that process with your attorney before you start house hunting.
03

Foreclosure and short sale

Three years from the date the foreclosure completed or the short sale closed. The completion date is what counts, not when you stopped paying or when the process started. Foreclosures can drag on for a year or more, so the clock sometimes starts later than people expect.
If the foreclosed loan was an FHA loan, there’s an additional consideration: FHA may have paid a claim on that loan, and you may be listed in HUD’s CAIVRS database. That has to clear before a new FHA loan is possible.
04

Extenuating circumstances: shortening the wait

FHA allows the waiting periods to be reduced when the bankruptcy or foreclosure was caused by something outside your control that has since been resolved. The classic examples:
  • Serious illness or death of a wage earner
  • Job loss from a layoff, plant closing, or employer failure (not from quitting or being fired for cause)
  • Divorce is sometimes accepted, but inconsistently
The reduced waiting period is typically 12 months for Chapter 7 and foreclosure. To get it, you need:
  • Documentation of the event (medical records, layoff notice, death certificate)
  • Evidence that the event caused the financial problem, not just coincided with it
  • Evidence the situation is resolved and you’ve re-established credit
This is a manual underwriting decision, and it’s not automatic. Underwriters approve extenuating circumstances when the story is clear and documented. They deny them when it reads like a rationalization.
05

What underwriters look for after a credit event

The waiting period is the minimum. What the underwriter actually wants to see is a recovery pattern:

Re-established credit.

At least a year of on-time payments on new or reaffirmed accounts. A secured credit card and an auto loan are the typical path.

No new problems.

A collection or late payment after the bankruptcy is a red flag, because it suggests the bankruptcy didn’t reset behavior.

Stable income.

Especially if job loss caused the event. Two years at a steady job matters more here than it does on a clean file.

Reserves.

More important on a post-bankruptcy file than almost any other. Two or three months of housing payments in the bank shows you’ve built a cushion.

Reasonable DTI.

A post-bankruptcy file at 48% DTI is a hard sell. At 38% it’s a much easier conversation.
06

What I've seen work

From the underwriting side, the post-bankruptcy files that get approved smoothly have a consistent shape: the event happened, there was a clear cause, the borrower waited the required period, and the credit report since then is clean and getting stronger every month. That’s a borrower who had a bad stretch and came through it.
The files that struggle are the ones where the bankruptcy is two years and one month old, there’s one new account with three months of history, and the DTI is at the limit. Technically eligible. Practically not ready.
If you’re near the end of your waiting period and thinking about buying, the best thing you can do is spend the next six months building the file, not the next six weeks trying to squeeze into a minimum.

Frequently asked questions

Yes, after 12 months of on-time plan payments and with court permission to incur new debt.

No, but you'll need to clear CAIVRS, which tracks federal debt defaults, and the three-year waiting period applies.

If the mortgage was discharged in bankruptcy and the home was later foreclosed, FHA generally applies the bankruptcy waiting period rather than the foreclosure one, provided the foreclosure was a result of the bankruptcy. This is a case-by-case determination.

FHA's minimums don't change. In practice, a post-bankruptcy borrower with a 640 is in a much better position than one with a 590, because the higher score demonstrates recovery.

Buying outside Colorado or Texas? Barrett Financial Group originates in 48 states. Get in touch and I’ll connect you with a licensed originator in yours.
Back to FHA Loan Requirements

Ready to Get Started with Your FHA Loan?

Take the next step with our easy and secure online loan application. Apply online, check your loan status, and complete your application tasks in one convenient place.
Apply