How Do I Get a Mortgage after Bankruptcy?

To get a mortgage after bankruptcy, you will often need to allow a specific period of time to pass after your bankruptcy discharge, accumulate a sufficient down payment, and demonstrate that you can responsibly manage your finances and credit. Standards for mortgage approval can vary considerably by lender or mortgage guarantee agency and by where you live. The lender or mortgage guarantee agency that approves your application will examine your finances closely in order to ensure that by taking out a mortgage you are not taking on a financial burden that you are not yet ready to meet. If you've only recently completed a bankruptcy, now is a good time to scrupulously manage your finances so that a mortgage will soon be an option for you.

Different countries have different laws regarding credit practices, so if you are interested in getting a mortgage after bankruptcy, it is a good idea to speak to a financial professional in the area where you live to find out what sort of restrictions apply to you obtaining a mortgage. If you live in the United States, a mortgage after bankruptcy can happen fairly soon, though the terms of the mortgage may not be particularly favorable to you. For example, some conventional lenders may be willing to issue you a mortgage within six months to a year of your bankruptcy discharge, but may require a huge down payment and charge you high interest rates. You may be better off waiting a bit and then applying for a mortgage after your credit score improves.

Other options for getting a mortgage after bankruptcy in the United States include working through the Federal Housing Administration (FHA) or the Veterans Affairs mortgage program, both of which often have less stringent credit requirements and require low or no down payments. The amount of time that you may have to wait to apply for one of these mortgage loans can vary depending on the type of bankruptcy you completed. For example, if you filed for Chapter 13 bankruptcy and completed your repayment plan, you may need to wait only 12 months to apply for an FHA mortgage. If your bankruptcy was a Chapter 7, you will probably have to wait two years before you can get an FHA mortgage loan approved.

Of course, you are not guaranteed a mortgage after bankruptcy just because you have fulfilled waiting period requirements. As a rule, you'll be expected to show that you have managed your money well in the time after your bankruptcy and that you have a sufficient income to afford your mortgage payments. Contacting a mortgage broker who is able to arrange FHA or VA loans can be a good first step in getting your mortgage and finding out what you need to do to get the best terms.