Declaring Bankruptcy Doesn’t Mean You Can’t Purchase A Home

You Can Still Purchase A Home After Declaring Bankruptcy: A Comprehensive Guide

A common fallacy that circulates among people is that once you declare bankruptcy, owning a home becomes an unattainable dream. This misunderstanding stems from the belief that bankruptcy negatively affects your credit history, thereby making it challenging to secure a mortgage. However, I am here to debunk this myth.

Understanding Credit Capacity

Let’s first address the matter of credit capacity. This term refers to the volume of debt you can shoulder and repay, which is determined by your income and existing loan payments.


Fact: Even individuals with a commendable credit score may struggle to secure the mortgage they desire due to their credit capacity.


So, the question arises – are you financially capable enough to qualify for a mortgage for your dream home? If your debt is sky-high, the chances are slim, and in such a case, declaring bankruptcy does not exacerbate your situation.

In many scenarios, filing for personal bankruptcy could pave the way for a future mortgage. How? Well, if your current debt is a roadblock, and declaring bankruptcy wipes it off, your debt-free status may increase your chances of qualifying for a mortgage.

The Influence of Credit Score

Declaring bankruptcy eradicates most of your unsecured debts, which is beneficial. However, it also leaves a mark on your credit report, indicating your bankruptcy, which isn’t as favorable. As you can see, maintaining a balance is crucial. Your goal should be to ensure that your credit report’s positives (debt-free post-bankruptcy) outweigh the negatives of declaring bankruptcy.

Post-filing bankruptcy and debt clearance, you can initiate measures to reconstruct your credit. Ensure timely payment of all your monthly bills, start saving money, and when you have some savings, consider acquiring a secured credit card or a small loan that you can repay swiftly to reinstate your credit.

The second crucial strategy to enhance your credit score is patience. The more time that passes since your bankruptcy, the less adverse impact it will have on your credit report.

Here’s a less-known fact: Even though Equifax records a first-time bankruptcy on your credit report for six years post-discharge, most mortgage lenders require you to be “clear” of your bankruptcy for only two years before they consider giving you a loan on favorable terms. Therefore, if you can rebuild your credit and save for a down payment within the first two years post-discharge, chances are high that you will qualify for a mortgage.

So, yes, declaring bankruptcy and purchasing a home is not mutually exclusive. However, whether or not you qualify for a mortgage, and how quickly you can secure it, depends on your efforts to rebuild your credit and save for a down payment.


In conclusion, declaring bankruptcy doesn’t mean you can’t purchase a home. It may present some challenges initially, but with time and conscious efforts, you can rebuild your credit and qualify for a mortgage. Don’t let the fear of bankruptcy deter you from realizing your dream of owning a home.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.