Personal bankruptcy and foreclosure are not home buying deal-killers. In fact, you can often easily buy a home two years after your foreclosure or bankruptcy. Lenders will want to know if your financial problem was caused by an explainable "one time only" circumstance—something like job loss, a failed business venture, or a serious illness. If there have been other credit problems in your history or if you just plain spent too much money, it will be harder to get a home loan. The next thing a lender will assess is your bill payment record after the bankruptcy or foreclosure. It’s crucial to re-establish timely payment. Your mortgage lender might require a 20% down payment. That leaves the lender with slightly less risk and it helps you, too. 

Many times, Private Mortgage Insurance (PMI) companies won’t insure people who’ve been bankrupt or foreclosed on. The 20% down payment will eliminate the need for mortgage insurance. And, depending on the lender, you may be able to buy a home sooner than two years after your troubles. It’s likely you’ll pay a higher interest rate. But later you can refinance, once you establish a financial track record.