Ways & How

how to get a home loan after bankruptcy

how to get a home loan after bankruptcy

If you want to know how to get a home loan after bankruptcy, you can start by re-establishing your credit. Your bankruptcy must have left a negative impact on your credit rating as well as on your capacity to apply for future loans. However, this doesn’t necessarily mean that you can no longer qualify for a home loan. You can expect that you may be required to pay a fairly higher interest rate compared to people who have no bankruptcy record on their credit file. The motivating factor is the fact that you can always refinance by the time your credit record improves. Remember, to get a home loan after you have declared bankruptcy requires patience, perseverance, and getting the necessary things done so that banks will become interested in lending you money. To get you started, study the guidelines below.

  1. Keep a positive attitude. Dismiss the idea that no one will lend you money after your bankruptcy. The truth is that there are a number of people who got a home loan after their bankruptcy compared to those who merely have bad credit.

    Remember, after you have declared bankruptcy, the law gives you another chance to start afresh. Thus, there are still lenders who will consider your loan application as you progress in your finances.

  2. Comply with the terms of your bankruptcy. In other words, make good on whatever the court requires you to do after your bankruptcy case is terminated. If the court decreed the validity of a repayment plan, and ordered you to pay a portion of your debts, comply as ordered. Never default on your repayments, so you can establish a good credit rating again. In this way, prospective lending companies will see that you are able to handle your debts correctly.

  3. Clean your credit. You can consider engaging the services of a financial specialist since changing your records can be a little difficult. You have to work on a number of loan transfers appearing on your file. It normally takes nearly 12 months before you can see results. The credit bureaus need 6 months or more in order to update your credit file. Log on to the nolo.com or any other related website, so you can get more information about cleaning a credit file. Your effort to fix your credit is a big plus on your application for a home loan. Doing so proves that you are serious in re-establishing a good credit rating.

  4. Show honesty. There is no cogent reason why you should hide your real financial history; your credit file won't lie. Lenders will appreciate it if you inform them of the true status of your finances. In other words, it is good to be straightforward. For example, a big down-payment can likely facilitate your application, but where will you get the money? At the onset, inform the lender as to the amount of money you can put up as a down-payment.

  5. Apply for an FHA loan. If you don’t see any luck dealing with traditional lenders, move to the Federal Housing Administration (FHA) loans. They allow applicants to put up a fairly smaller amount as a down-payment. You can qualify for an FHA loan if the amount of the loan is lower than or equal to $219,849, except in Guam, Virginia Islands, Hawaii, and Alaska, wherein the required loan amount for every family is $329,774.

There are individuals who dismiss the possibility of purchasing a home after they have suffered bankruptcy. The truth is that buying a property, like a house, can significantly improve a credit record; thus, the negative effects of bankruptcy will eventually be reversed. The question about how to get a home loan after bankruptcy may appear daunting since you cannot expect the lending institutions to approve your home loan application. However, in the long run, they will likely give a second look over your application, especially once you have shown that you are capable of managing your finances and debts properly.


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