Home ownership is an achievable goal – even for those with poor credit histories
I often speak with potential home buyers and agents about how to finance a home after a bankruptcy or other credit setback. Conversations with people who have had credit struggles are usually accompanied by a sense of despair.
Often, they can’t see a way to repair their credit issues while saving money for down payments. The fact of the matter is this, for those who are serious and disciplined in repairing their credit, home ownership is an achievable goal.
Bankruptcy is not the end of your mortgage or home ownership goals.
You can get approved in as little as one day after a bankruptcy in some cases.
From the conventional standpoint, you can be ready in as little as 2 years with some planning.
Research, Learn, and Understand Resources Available
While I certainly don’t want to sugarcoat the seriousness nature of bankruptcy and poor credit, I do want to offer some words of encouragement. First and foremost, understand the guidelines for many loan programs reward potential buyers who are successfully coming out of a negative credit environment. Government loan programs have features specifically designed to acknowledge responsible credit repair. Yes, these features are more expensive than conventional loans. But, owning a home is almost always better financially than renting.
Options for Immediate Purchase After Bankruptcy
There are some lenders, in fact, that offer mortgages 1 day out of foreclosure, short sale, or bankruptcy. These non-QM lenders offer fantastic options with surprisingly affordable terms, considering a recent credit event. Here are a few of the specifics:
- Loans up to $1 million
- Up to 85% LTV
- Debt-to-Income ratios of up to 50% considered
- Owner-occupied, 2nd homes, and investment properties
- Non-warrantable condos considered
- Jumbo loans available
- 5/1 ARM or 30-year options available
Chapter 7 Bankruptcy Waiting Periods for Conventional Loans
Each loan type has its own waiting period guideline after a bankruptcy. Waiting periods for the four major types of loans are as follows.
- FHA loans: 2 Years
- VA home loans: 2 Years
- Conventional mortgages: 4 Years
- USDA home loans: 3 Years
Stay Positive and Be Encouraged
It will take time and require discipline to achieve your home ownership goals – but be patient!
There are many strategies which can be employed to repair credit and acquire financial backing to buy a new home. There are also great resources available that offer quality advice on financial planning, real estate planning, and mortgages. Reach out to me as well, for more information and help!
