If you’ve declared bankruptcy, you might feel like you’ll never have your finances together again. And for many, they believe they will never be able to own a house again. However, bankruptcy isn’t a permanent mark on your financial track. Your credit score will drop significantly after declaring, however, depending on the type of bankruptcy, you will get a better grasp on your finances eventually. Here is a brief guide on buying a home after declaring bankruptcy.

Applying for a mortgage after declaring bankruptcy is different for individuals. Some may only need to wait a couple of years, while others may have to wait up to 10 years. The different types (chapters) you declare will determine how long you need to wait.

Chapter 7 and 13 bankruptcies are the most commonly declared bankruptcies for individuals. Chapter 7 indicates that the debtor seeks to liquidate their assets and wipe their debt. This bankruptcy will essentially wipe your credit history, however, it dramatically lowers your score.

In Chapter 13 bankruptcies, debtors are seeking to reorganize than debts and create payment plans. You don’t lose all of your assets, but you must make payments to the creditors. Chapter 13 does not take a bigger toll on your credit as opposed to Chapter 7.

For those wanting to apply for a home loan and have declared Chapter 7 bankruptcy, the declaration must have been dismissed or discharged 2 or more years before the application occurs. The borrower must also have established good credit. FHA loans may be approved only after a year since discharge, however, this is not that likely.

For Chapter 13, you may apply for an FHA loan one year after dismissal. But this can only occur if you have made your court-ordered payments on time and obtained written permission from those overseeing your case. The lender must be satisfied with your explanation of your bankruptcy. You may wait an additional year to forgo the manual underwriting.

Being hit with major financial issues can be one of the most devastating things you can face as an individual. While you might find that you’ve hit rock bottom, there is a road to recovery. You will eventually put the bankruptcy behind you and be able to buy a home once again. It takes time and patience, but there is light at the end of the tunnel. If you’ve experienced bankruptcy in the past and are considering buying a home, you should meet with an experienced mortgage lender to find the options that are the most beneficial for you.