Obtaining a Mortgage after Bankruptcy

A personal bankruptcy stands out as a conspicuous blemish on a consumer’s credit report for as long as 10 years. But the barrier it presents to obtaining a mortgage doesn’t have to last that long.

Many individuals who sought bankruptcy protection during the recent recession, which officially ended in 2009, may now be eligible to apply for a mortgage. The mandatory waiting periods to apply for a mortgage backed by Fannie Mae or the Federal Housing Administration last from two to four years.

“Right now, a lot of people are coming out of the hard times, after a bankruptcy or foreclosure, especially within this last year,” said Sean Young, a senior mortgage adviser with FirstCal Colorado, a direct lender in the Denver area. “We’re doing a lot more applications for people who lost their house, had to rent and rebuild their credit, and now are back in the market.”

Personal bankruptcy filings climbed steadily beginning in 2007 before peaking in 2010 at about 1.5 million filings, according to the American Bankruptcy Institute. Since then, bankruptcies have been on the decline, which the institute attributes to a corresponding drop in the level of delinquent debt subject to discharge through bankruptcy.

Households that went through a Chapter 7 liquidation bankruptcy must wait four years from the date of discharge (when their debts are wiped out) before applying for a conventional loan. The waiting period, according to Fannie Mae guidelines, is two years from discharge for Chapter 13 bankruptcies, in which debts are partially repaid under a court-approved plan.

The wait for a Federal Housing Administration loan is two years for Chapter 7, and one year for Chapter 13, provided the individual has kept up with payments under the reorganization plan and has permission from the court.

Obtaining a Mortgage After Bankruptcy

Convenient Locations

In order to provide convenience for clients throughout Chicago and Northern Illinois, we have offices in the following locations: 

Chicago • Schaumburg  • Oakbrook • St. Charles • Naperville • And More


We have office locations throughout the Chicago Area:

Chicago (Downtown)


Oak Brook


All calls are routed through our Downtown office for your convenience.

Phone: 312-967-3159

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