Myth #28: “You’ve Had a Bankruptcy — You’re Not Eligible.”

MYTH: “If you’ve had a bankruptcy, you can’t qualify for a mortgage.”

TRUTH: Bankruptcy doesn’t permanently shut the door on homeownership — it just resets the clock. Many programs allow new mortgages as soon as 2–4 years after discharge, sometimes even sooner with reestablished credit and solid income.

WHY PEOPLE BELIEVE THIS:

Bankruptcy feels final. When you’ve gone through it — or watched someone else — it’s easy to assume lenders won’t trust you again. Add in all the “credit repair” noise online, and it’s no wonder people think they’re disqualified for life.

DETAILED BREAKDOWN:

Each loan program sets its own timeline:

• FHA Loans: Eligible 2 years after Chapter 7 discharge (with reestablished credit). Some can even qualify on FHA while still in repayment for Chapter 13.
• VA Loans: Eligible 2 years after Chapter 7, or 1 year into Chapter 13 with on-time payments and court approval.
• USDA Loans: 3 years after Chapter 7, or 1 year into Chapter 13 (similar to VA).
• Conventional Loans: 4 years after Chapter 7, or 2 years after Chapter 13 discharge.

👉 Key Point: Reestablishing credit and keeping new accounts current can dramatically improve eligibility — lenders don’t just look at the past; they look at the pattern of recovery.

REAL-WORLD EXAMPLE:

A client of ours filed Chapter 7 in 2020 after a business failure. He rented, saved diligently, rebuilt his credit, and kept his debt-to-income ratio low. This summer — just four years later — he closed on a new home with an FHA loan and a competitive rate.

THE BOTTOM LINE:

Bankruptcy isn’t the end of the story — it’s a reset button. The sooner you rebuild, the sooner you’re back in the game.

READY TO START YOUR COMEBACK?

Everyone’s timeline is different, and yours might be shorter than you think. Contact me privately about your “Bankruptcy Bounce-Back Plan," I'd love to help you get your questions answered and your plan in place.