After Bankruptcy: Can You Get a Mortgage?

Mortgage loan document

A bankruptcy record on your credit history makes it challenging to qualify for a mortgage. Apart from deducting 100 or more points from your score, the record also stays on your history for 10 years. While you don’t necessarily have to wait 10 years to get a mortgage, it’s important to start rebuilding your credit and understand what you can expect in getting a home loan after bankruptcy.

Can you handle the mortgage?

Primary Residential Mortgage, Inc. and other mortgage companies in Portland note that in many cases, a traditional lender can approve your application (with market interest rates) about four years after filing for bankruptcy. Note that this is only likely to happen if you’ve shown efforts to increase your score and are in a better financial situation to deal with the monthly payments.

Are there any other options?

You can also apply for an FHA loan, two years bankruptcy filing. This will enable you to buy a loan with a little down payment, but the interest rates are a little bit higher than market rates. There are also those who will offer you a loan six months after the filing, but the rates can be extremely high and may require a big down payment (30% range).

What should you do before applying?

If you intend to get a loan with a bankruptcy record, it’s best to start repairing your score after filing. Keep in mind that your rating can improve right away if you are consistent with good credit habits. It’s also important not to make several credit or loan applications, even if you can qualify for them. This can only decrease your score and make it harder to get a mortgage

Talking to a qualified lender will help you learn more about your loan option. If you want to qualify for better rates, however, it’s advisable to put off buying first. You can start saving first and slowly rebuild your score. You can also get a secured credit card, which may allow you to get an unsecured one in the future.