Short answer: a past bankruptcy or foreclosure does not by itself rule out an FHA, VA or USDA guaranteed loan, but each program sets a waiting period. FHA looks for two years after a Chapter 7 discharge and three years after a foreclosure, deed in lieu or short sale; VA lets the lender disregard a Chapter 7 discharge or a foreclosure more than two years before closing; USDA treats a discharge or a completed foreclosure within 36 months before application as significant derogatory credit that needs further review. Each program has exceptions for Chapter 13 payment plans and for events beyond your control. This page covers federal program rules only. It is general information, not legal or financial advice.
The waiting periods at a glance
| Event | FHA (manual underwriting) | VA | USDA guaranteed |
|---|---|---|---|
| Chapter 7 discharge | 2 years from discharge to case number assignment; 12 to 24 months with documented extenuating circumstances | May be disregarded after 2 years from discharge to closing; 1 to 2 years only if both VA conditions are met; within 12 months, generally not | Discharge within 36 months before application needs further review |
| Chapter 13 plan | 12 months of the payout period elapsed, payments on time, written permission from the bankruptcy court | Favorable consideration after 12 months of satisfactory payments if the trustee or judge agrees to the new credit; plan finished on time may show credit is re-established | Favorable consideration after 12 months of consecutive on-time payments if the trustee or judge agrees to the new credit |
| Foreclosure | 3 years from title transfer | May be disregarded after 2 years from closing; 1 to 2 years only if both VA conditions are met | Foreclosure completed within 36 months before application needs further review |
| Deed in lieu | 3 years from the deed in lieu | Treated with foreclosures; a waiting period may not be needed if payments were current and you kept talking to the servicer | No separate rule in 3555.151(i); ask the lender |
| Short sale | 3 years from title transfer, unless you were current for the 12 months before it | Treated with foreclosures; a waiting period may not be needed if payments were current and you kept talking to the servicer | No separate rule in 3555.151(i); ask the lender |
Sources and details for each row follow. The FHA column is the manual underwriting rule; under the TOTAL scorecard, an event inside the same window sends the loan to a Refer and manual underwriting.
FHA loans
Under TOTAL scorecard underwriting, the lender must document two years since the discharge of any bankruptcy and three years since a short sale, a foreclosure or a deed in lieu; inside those windows, the loan is downgraded to a Refer and manually underwritten (HUD Handbook 4000.1, II.A.4.b.iii(F) through (I), HUD, section dated 04/10/2025 in the update issued August 12, 2026, read October 30, 2026). The manual underwriting rules (II.A.5.a.iii(H) through (K), section dated 11/10/2026 in the same update, a date after our read date, so check it again after that date) say:
- Chapter 7: at least two years since discharge at case number assignment, and in the two years before, you have reestablished good credit or chosen not to take on new credit. Twelve to 24 months may be acceptable if the bankruptcy was caused by extenuating circumstances beyond your control and you have since shown you can manage your finances responsibly.
- Chapter 13: at least 12 months of the payout period have elapsed, your payments in the last 12 months were satisfactory and on time, and the bankruptcy court has given written permission for the new mortgage.
- Foreclosure or deed in lieu: generally not eligible within three years, counted from the deed in lieu or the transfer of the home to the foreclosing entity.
- Short sale: generally not eligible within three years from the transfer of title, unless every mortgage payment and every installment debt payment was made within the month due for the 12 months before the short sale.
- Consumer credit counseling plan: does not disqualify you if one year of the plan has elapsed, payments were on time, and the counseling agency gives written permission.
For a foreclosure, deed in lieu or short sale, the lender may grant an exception to the three years if the event resulted from documented extenuating circumstances beyond your control, such as a serious illness or the death of a wage earner, and you have reestablished good credit since. HUD says divorce is not an extenuating circumstance, except where the mortgage was current at the divorce, the former spouse received the home and it was later lost, and that being unable to sell because of a job transfer does not qualify. The lender must also document that the events behind a bankruptcy are not likely to recur. Owners behind on an FHA loan today can read the FHA partial claim.
VA loans
VA’s Lenders Handbook says a bankruptcy or a foreclosure, deed in lieu or short sale does not in itself disqualify the loan, and the lender must develop the facts behind it (Chapter 4, Topic 7, subsection b, VA, updated August 26, 2026, read October 30, 2026). For an event one to two years before closing, it is probably not possible to find you a satisfactory credit risk unless both are true:
- you have bought consumer items on credit since and paid them satisfactorily over a continued period; and
- the event was caused by verified circumstances beyond your control, such as unemployment, prolonged strikes or medical bills not covered by insurance (VA says divorce is not generally viewed that way).
VA adds a separate path for a bankruptcy caused by the failure of a self-employed borrower’s business: a permanent job since, no derogatory credit before the self-employment or after the bankruptcy, and a failure not due to misconduct. When a foreclosure, deed in lieu or short sale goes with a bankruptcy, VA counts from the later of the discharge or the transfer of title. If the lost home had a VA loan, your remaining entitlement may be lower; see VA loan entitlement.
USDA guaranteed loans
The USDA rule lists, as indicators of significant derogatory credit that need further review and documentation on a manually underwritten loan, a foreclosure completed in the 36 months before application, a bankruptcy discharged in the 36 months before application, a rent or mortgage payment 30 or more days late in the last 12 months, and a prior agency loan that caused a loss to the Government (7 CFR 3555.151(i)(3), eCFR, text up to date as of October 28, 2026, read October 30, 2026). A lender may give favorable consideration after 12 months of consecutive on-time payments under a bankruptcy repayment plan if the trustee or judge agrees to the new credit. The lender may also consider extenuating circumstances: whether the problems were temporary, whether they were beyond your control, and whether the loan would cut your housing costs significantly (3555.151(i)(4)). See USDA rural home loan basics.
A note on the citations
The FHA credit rules sit in two places in Handbook 4000.1: II.A.4.b.iii for TOTAL scorecard loans and II.A.5.a.iii for manual underwriting. The USDA indicators are in 7 CFR 3555.151(i)(3), with the exceptions in (i)(4).
Example: counting the months
This example is only for the math, with an example timeline, not a loan decision. It assumes a Chapter 7 discharge 26 months before the FHA case number date, the VA closing date and the USDA application date, all treated as one date for simplicity.
| Program | Window | Months elapsed | Result of the count |
|---|---|---|---|
| FHA | 24 months | 26 | 26 − 24 = 2 months past the window |
| VA | 24 months | 26 | 26 − 24 = 2 months past the window |
| USDA | 36 months | 26 | 36 − 26 = 10 months still inside the window, so further review |
Passing a window only clears this one rule. The lender still looks at the rest of your credit, income and debts.
What lenders look at in rebuilt credit
The three programs point to the same evidence: on-time payments since the event, new credit handled well or no new debt taken on, a documented reason for the event, and proof that it is not likely to happen again. For loans other than mortgages after a bankruptcy, see personal loans after bankruptcy and bankruptcy and personal loans; for the difference between giving up a home by sale or by deed, see short sale vs deed in lieu.
Questions to ask the lender
- Which date do you count from: discharge, filing, title transfer or the deed in lieu?
- Which date do you count to: case number assignment, application or closing?
- Will this loan go through automated or manual underwriting?
- Do my circumstances fit an extenuating-circumstance exception, and what papers prove it?
- If I am in a Chapter 13 plan, what do you need from the trustee or the court?
Checklist
- Get the bankruptcy discharge papers, or the deed, Closing Disclosure or other paper that shows the date the home changed hands.
- Pull your credit reports and check that the dates on them are right.
- Write down the reason for the event and gather proof, such as medical bills or a layoff notice.
- Keep every payment on time from now on.
- For questions about your bankruptcy case or a deficiency, talk to a lawyer.
To find housing counseling agencies that HUD has vetted, use the CFPB housing counselor search. You can submit a complaint at consumerfinance.gov/complaint.
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Sources
- HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Update 18, issued August 12, 2026), PDF
- VA: VA Pamphlet 26-7, Lenders Handbook, Chapter 4, Credit Underwriting (updated August 26, 2026)
- eCFR: 7 CFR 3555.151, Eligibility requirements, current text up to date as of October 28, 2026
- CFPB: Find a housing counselor
- CFPB: Submit a complaint
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.