A question I am commonly asked is, if I have previously had a bankruptcy can I still qualify for a USDA loan? USDA guidelines state that you need to be 36 months discharged from a chapter 7 bankruptcy. If you have a chapter 13 bankruptcy you are eligible for financing while IN your bankruptcy if you have at least 12 months of on time payments, have the bankruptcy trustee’s permission and your overall credit is acceptable for USDA Loan financing.

It is possible to qualify for a USDA Loan with LESS than 36 months from bankruptcy discharge. In fact in many states its common to have rural development issue a credit waiver (essentially an exception) to the 36 month bankruptcy discharge rule. In most states rural development will allow a borrower to obtain a USDA Loan in as little as 24 months from a bankruptcy discharge.

In order to qualify for a credit waiver you would need a minimum of a 640 credit score, and would need to have established at least 3 credit trade lines (items that report to your credit report) with acceptable payment

History for at least 12 months. Also, to be considered for an exception you would need to have no negative marks on your credit since your bankruptcy.

It is generally a good idea to only apply for a USDA loan less than 3 years from a bankruptcy if you have a stable job history, and the ability to prove that you have been paying rent for the last 12 months.

To learn more about how to qualify for a USDA loan with a previous bankruptcy contact one of our USDA loan agents at 855-900-8732