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Buying A Home After BankruptcyA bankruptcy can stay on your credit report for a long period of time, usually seven to ten years. This can make it seem more difficult to buy a car, get a credit card, or buy a home, but with a little perserverance, it can be done.
What You Need to Know About Buying a Home After Bankruptcy
When you are buying a house after filing bankruptcy two factors become most important: verification of your income and a larger than normal down payment.
Most lenders would prefer you wait for at least two years after filing for bankruptcy before you purchase a home. As well if you can show that all your bills have been paid on time since your bankruptcy, your application for a mortgage loan will be viewed more favorably.
Do You Have to Wait to Get a Home?
You can get a home mortgage loan after filing for bankruptcy even before the preferred two year waiting period. Your credit report must show that all of your bills are being paid on time and you will probably have to prove employment and possibly look for a guarantor.
Down Payment For A Bankruptcy Home Loan
When you have a bankruptcy on your credit report, the lender will expect a larger down payment than is usually required. You should have at least 5% or more ready as a down payment. In many cases, 25% down payment or more will be required.
If you do not currently have enough money saved up for a down payment, start saving now! Open up a savings account at your local bank. With a savings account you will be able to show your statement to the lender as proof that you actually have the money to use for a down payment.
You can receive monetary gifts from relatives and friends and add them to your own savings. Keep in mind that you do have to tell the lender the truth about where the money for the down payment came from. Earning the money and getting gifts will be viewed more favorably by lenders than borrowing from relatives and friends.
You can also apply for assistance through various programs. Research the available programs in your area that could assist your home loan search.
As you can see, buying a home after bankruptcy is not as difficult as you may have thought. Just remember that you will probably be required to have that larger down payment and show verification of your income and employment to the lender.
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