A bankruptcy waiting period is how long a loan program makes you wait after a bankruptcy before it will approve a new mortgage. The clock almost always starts at the discharge date, the day the court releases you from the debts, and FHA, VA and USDA all run shorter clocks than Conventional. A Chapter 13 filer on FHA or VA doesn't even need to wait for the plan to finish.
The waits, program by program
| Program | Chapter 7 | Chapter 13 |
|---|---|---|
| FHA | 2 years from discharge; 12 months with extenuating circumstances | 12 months of on-time plan payments and court approval |
| VA | Generally 2 years from discharge; 1 to 2 years can work with extenuating circumstances | 12 months of on-time plan payments and trustee approval |
| USDA | 36 months from discharge | 12 months of on-time plan payments with court or trustee permission |
| Conventional (Fannie Mae) | 4 years from discharge or dismissal; 2 years with extenuating circumstances | 2 years from discharge; 4 years from dismissal, or 2 with extenuating circumstances |
Fannie Mae adds a rule for repeat filings: with more than one bankruptcy in the past seven years, the wait is five years from the most recent one, or three with extenuating circumstances.
Extenuating circumstances means a one-time event you couldn't control, such as a serious illness, the death of a wage earner or a sudden job loss, backed by paperwork. Overspending and divorce generally don't qualify on their own.
Counting the months: an example
Andre's Chapter 7 was discharged 26 months ago. Here's where he stands with each program today:
| Program | Months required | Months to go |
|---|---|---|
| FHA | 24 | 0, eligible now |
| VA | 24 | 0, eligible now |
| USDA | 36 | 10 (36 − 26) |
| Conventional | 48 | 22 (48 − 26) |
| Conventional with documented extenuating circumstances | 24 | 0, eligible now |
Andre can buy with FHA right away at 3.5% down from a 580 score. If he's a veteran, VA works today with nothing down. On a $300,000 FHA purchase, he needs $10,500 for the down payment ($300,000 × 3.5%), and FHA 100% financing can cover even that through a down payment assistance second, subject to the assistance program's own credit rules.
Using the wait well
The program checks more than the calendar. Underwriters want to see re-established credit: on-time rent, a secured card or two paid every month, no new late payments. Keep your discharge papers and the full bankruptcy schedule handy, since the lender will ask for them. If an illness or a layoff caused the filing, write a short letter with documents that show the dates. That letter is what opens the shorter extenuating-circumstance windows.
FHA's loan requirements guide covers the rest of FHA's rules, and the affordability calculator shows the price your income supports once your clock runs out. Call AAA Capital Funding at 888-601-8344 with your discharge date, and we'll tell you the first day each program opens for you.