Getting a Mortgage After Chapter 13 Bankruptcy in California

By Mike Basti, Licensed Mortgage Broker (NMLS #377740) · Updated August 2026

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You Can Buy During an Active Chapter 13 Plan

This is the part most borrowers do not know. FHA and VA both permit a mortgage while you are still in a Chapter 13 repayment plan — you do not have to wait for discharge.

Two conditions apply. You need at least 12 months of on-time payments into the plan, and you need written permission from the bankruptcy trustee to take on the new debt. Chapter 13 plans run three to five years, so waiting for discharge can cost you years of appreciation in a market like California.

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Waiting Periods by Loan Program

Every program sets its own clock, and the difference between them is substantial.

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Note the difference between discharge and dismissal on conventional financing. A discharge means you completed the plan; a dismissal means the case was thrown out. Fannie Mae treats dismissal far more harshly — four years versus two.

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Non-QM: Financing Without the Wait

If you need to buy before the standard waiting period is up, non-QM programs price for that risk rather than excluding you. Some lenders will fund one day out of bankruptcy.

Expect 20% to 30% down and a rate roughly 1% to 3% above conventional. In exchange, there is no waiting period. Many borrowers use a non-QM loan to buy now, then refinance into conventional pricing once the seasoning clock runs out — which is often cheaper than renting for three more years in a rising market.

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The relevant programs are non-QM, portfolio loans, and for investment property, DSCR loans, which qualify on the property’s rent rather than your credit history.

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What Trustee Approval Involves

Because a Chapter 13 plan governs your finances, taking on a mortgage requires the court’s permission. Your attorney files a motion to incur debt, and the trustee evaluates whether the new payment leaves you able to continue your plan payments.

Approval typically takes two to four weeks, so start the motion early. Practically, trustees approve when the new housing payment is at or below your current rent — you are not increasing risk to creditors.

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Rebuilding Credit While You Wait

Credit score requirements do not disappear because a program allows post-bankruptcy lending. FHA still wants 580 or better for 3.5% down, and 500 to 579 requires 10% down.

The fastest repair after a bankruptcy is boring: a secured credit card kept under 30% utilization and paid in full monthly, every plan payment on time, and no new collections. Most borrowers see meaningful movement within 12 to 18 months. Check where you stand with our DTI calculator, since debt-to-income matters as much as score.

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California-Specific Considerations

California’s homestead exemption — between roughly $349,720 and $699,426 depending on county median values, indexed annually — is among the most generous in the country. Many homeowners retain their home through bankruptcy rather than losing it, which changes the calculation entirely if you are deciding whether to file.

If you kept your home and want to access equity after discharge, a cash-out refinance or HELOC follows the same seasoning rules as a purchase.

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Frequently Asked Questions

Educational information only, not a commitment to lend. Program terms vary by lender and are subject to credit approval. Sources: FHFA, HUD, VA, CFPB, California DRE. Sponsored by Save Financial, Inc. (NMLS #377740). California DRE #01875766. Equal Housing Lender.