If you're dreaming of buying a home in St. Louis but you've gone through a Chapter 13 bankruptcy, you may be wondering if homeownership is still possible. The good news is that with the right preparation, you can still get approved for a mortgage in St. Louis even after bankruptcy. Here's what you need to know.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy allows people who have regular income to keep property, like a house or car, while catching up on debt through a 3-5 year repayment plan approved by the bankruptcy court. This type of bankruptcy stays on a credit report for seven years. However, it's better for your credit than Chapter 7 bankruptcy, which completely liquidates assets to pay off debt and stays on your credit for 10 years. With Chapter 13, you get to keep your property by agreeing to make payments over time until debts are paid off. This demonstrates to lenders that you are committed to honoring your financial obligations.

How Chapter 13 Bankruptcy Affects Mortgage Approval

There's no getting around the fact that having a bankruptcy on your record will make getting a mortgage more challenging. Mortgage lenders view borrowers with recent bankruptcies as higher risk. You'll have a harder time getting approved, and you may not qualify for the lowest interest rates. Nevertheless, Chapter 13 bankruptcy is not necessarily an automatic disqualifier for a mortgage. Here are a few key factors that lenders will consider:

Time since bankruptcy discharge is an important factor. The longer it's been since your Chapter 13 case was discharged, the better. Most mortgage lenders want to see at least two years since discharge before approving a loan. This gives you time to reestablish your credit. Your post-bankruptcy credit history is also important. What have you done credit-wise since your bankruptcy? Opening new credit accounts responsibly and maintaining on-time payments will help offset the negative impact of bankruptcy. Lenders want to see you using credit wisely after bankruptcy. Also, expect to be required to make a down payment of at least 10-20% if you're applying for a mortgage close to your bankruptcy discharge.

How to Improve Your Mortgage Chances After Chapter 13 Bankruptcy

While your bankruptcy history can't be erased, there are some steps that you can take to rebuild your credit profile and put yourself in the best position to get approved for a St. Louis home loan. Waiting at least 12-24 months after bankruptcy discharge before applying will give you time to reestablish credit. Get current on all your bills and avoid late payments. Make all credit and loan payments on time, every time. This shows lenders you can handle payments responsibly. Keep credit card and revolving debt low, as high balances raise red flags. And save up for a sizeable down payment of at least 10-20%. More is better – big down payments reassure lenders.

Consider talking to a local HUD-approved housing counselor for guidance on getting pre-approved after a Chapter 13 bankruptcy. With diligence and patience, you can absolutely bounce back from this unfortunate situation and buy a home in St. Louis. Rebuilding credit takes time, but stay focused on responsible money management and use credit wisely after bankruptcy. With the right approach and persistence, homeownership can still be within your reach!


If you’d like to see about getting pre-approved for a mortgage, you can do that here. We would also be happy to recommend some experienced, local Realtors to help you in the homebuying process. Just reach out to us — you can find all of our contact information at https://www.frontierhomemortgage.com/contact-us/