A bankruptcy filing delivers a devastating blow to your credit and FICO score, but it doesn’t mean you have to wait 10 years before you can qualify for a mortgage. Many consumers who have filed for bankruptcy have been able to obtain a mortgage.

While credit card companies may care about what happened before you filed for bankruptcy, many mortgage lenders are more interested in your recovery — what you’ve done since your filing. It won’t happen over night, but here are some tips and things to keep in mind when you inquire about a mortgage with a tarnished credit past:

Give explanations. No mortgage lender is going to ignore the fact that you’ve filed bankruptcy and he or she will likely want to know the cause of the filing. Your lender will be particularly interested in whether the same situation could happen again. Your chances of being qualified are much better if your bankruptcy was caused by a single event such as a loss of employment or a death in the family, than if it was the result of “just spending too much.”

If the bankruptcy resulted from a single event, it is important to show your lender paperwork describing the incident, such as the layoff notice or death certificate.  A government lender, like FHA will ask to see a copy of your bankruptcy papers to show it was dischared, and when, and the type of bankruptcy it was.  These papers may also clear any question about whether certain derogatory debts on your credit were included in the bankruptcy.

Demonstrate good money habits now. Many people who file bankruptcy swear off credit altogether, however, it is important to re-establish your credit rating. Get a secured credit card or take on some sort of loan — furniture, a car or a major appliance — to demonstrate that you are able to make timely payments. Make sure you are making other payments (utility bills, cell phone, etc.) on time as well. You won't turn things around in a year but your credit score will improve over time.

Dispute any credit report errors. There’s no need to add to your troubled credit history with errors on your credit report. Get a free copy of your credit report from www.annualcreditreport.com   and check it for errors. 

Shop around for a lender.  Conventional financing generally requires 4 years to pass after a chapter 7 bankruptcy (discharge date) and 2 years to pass after a chapter 13 bankruptcy to qualify.  Lenders refer to these timeframes as a "seasoned" bankruptcy.  We say "generally" because conventional loans are put through an automated underwriting system and if the system accepts a borrower with less "seasoning" then they can still get an approval. 

FHA or VA financing requires 2 years after a chapter 7 bankruptcy and 1 year after a chapter 13 bankruptcy.  This means that while you are still in your chapter 13 bankruptcy, you can purchase a home.  You  have to prove you've been making your payments on time to the trustee for 12 months and you cannot have any derogatory accounts that occured after the bankruptcy filing.

Save your money. You most likely will need at least 3% down and you will have a better chance at getting an approval if you have some money in the bank for reserves.  Remember you are tying to show the lender that you are a good risk.

Live within your means.  Think small when the time comes to look for a home. Smaller homes often mean smaller mortgages.