You most likely first considered a bankruptcy filing because you needed a fresh start; your plans for starting over may also include owning a home. Unless you have enough cash to pay for a home’s selling price, homeownership typically involves obtaining mortgage approval.
Although lenders often consider a previous bankruptcy a risk factor, you could still obtain the financing you require. As noted by TheMortgageReports.com, however, you may need to wait between two and four years before you qualify for a home loan.
What determines how long I have to wait to apply for a mortgage?
Your bankruptcy filing and the mortgage type affect your wait time. Conventional mortgages may require a wait time of four years from the date of a Chapter 7 discharge. Loans through Veterans Affairs or the Federal Housing Administration, however, could only involve a two-year waiting period. A United States Department of Agriculture loan typically requires a three-year minimum wait.
Lenders often require a shorter wait time after a Chapter 13 bankruptcy. Because a Chapter 13 filing includes a repayment plan, a financial institution may view your ability to make regular payments in a more favorable light. Bear in mind that wait times begin on your bankruptcy discharge date rather than your filing date.
How can I increase my chances of getting a home loan after bankruptcy?
Stay focused on rebuilding your credit by remaining up-to-date on all of your bills and monthly payments. It also helps to show mortgage lenders that you avoid overusing any of the credit lines you established since your bankruptcy discharge. Check your credit score regularly; a score of 620 or higher could make a difference in getting approval for a home loan.
Your bankruptcy discharge provides more than an opportunity to start over and rebuild. By applying the experience-based knowledge you gained, you can better control your finances and work towards homeownership.