Getting A Home Loan After Filing For Bankruptcy


Filing for bankruptcy can be a major financial setback. However, in some instances it is necessary in order to be able to discharge debts that cannot be paid. Recovering from a bankruptcy can take years, however it is possible to get back into a financially healthy situation. After filing many feel that owning a home is something that is out of reach. However, home ownership after bankruptcy is certainly possible. Here are a few things to know about getting a home loan after filing for bankruptcy.

There Is A Waiting Period

One thing to consider when it comes to qualifying for a mortgage after declaring bankruptcy is the fact that there is a waiting period. This period can vary depending on whether or not there are extenuating circumstances. The waiting period will also vary depending on the lender and what type of bankruptcy was filed. Conventional and Fannie Mae loans have waiting periods between two and four years while VA and FHA loans have waiting periods between one and two years. Multiple bankruptcies and having foreclosures in the past can lead to even longer waiting periods.

Bankruptcy Sticks Around For Awhile

Even though the waiting period for applying for a mortgage is just a few years, the bankruptcy itself sticks around longer when it comes to credit reports. Bankruptcies stay on credit reports for anywhere between 7 and 10 years. It's also very likely that lenders will want to know the circumstances behind the bankruptcy filing. Potential homeowners should be prepared to answer these questions. Working on the financial health in the meantime is also very important. Rebuilding credit is key when it comes to being able to get a home loan. Plenty of lenders offer home loan services that can help those who have filed for bankruptcy figure out what they need to do in order to qualify for a home loan.

Save For A Down Payment

Rebuilding credit and finishing the waiting period are both essential when applying for a home loan after a bankruptcy. Saving up for a healthy down payment can also be a big help when it comes to getting a home loan after bankruptcy with some loans required just a few percent. However, a down payment of 20 percent is usually what's required in order to avoid paying mortgage insurance. Have a down payment of 20 percent or more may make a lender more likely to approve a home loan after a bankruptcy.

After filing for bankruptcy many feel that their dreams of home ownership are over. However, it is possible to get a home loan after a bankruptcy. After bankruptcy it's important to determine what the waiting period is before it's possible to apply for a home loan. This waiting period varies depending on the type of bankruptcy and whether or not there were extenuating circumstances. Working on rebuilding credit and saving for a down payment while waiting will also make it easier to obtain a home loan. Contact a lender, like FCN Bank, for more help.


31 August 2017

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