How to Buy a New Home After Bankruptcy
Some people feel that it's impossible to qualify for a home mortgage after bankruptcy, due to a low credit score. This is far from the truth. The consequences of a bankruptcy do not affect credit forever, and once you rebuild your credit history and score, you can get a mortgage for a new home with an affordable interest rate.
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Instructions
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Start over with a new line of credit to begin rebuilding your score. Getting a credit card or installment loan after a bankruptcy can put you on the path toward fixing your credit and qualifying for a mortgage. Look into secured credit cards from your bank, or apply for a bad-credit loan using collateral.
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Pay on time to fix credit after a bankruptcy. Do not miss a payment, and pay bills early if possible to help raise your low credit score.
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Allow two years to pass before looking for a mortgage. Lenders have their own criteria for dealing with applicants who have a bankruptcy in their past. For instance, Federal Housing Administration mortgages will be approved once your bankruptcy is at least two years old, provided you have a credit score of at least 620.
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Set money aside as a down payment on your new mortgage. FHA mortgages require less than 5 percent down. Start conserving your cash and plan for this expense to help you qualify for a mortgage after bankruptcy. Other loans may require between 10 and 20 percent down.
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Tips & Warnings
Secured credit cards do not require prior credit history or a good credit history, which makes them ideal for establishing or re-establishing credit.
One to two years of steady paychecks will help you qualify for a mortgage.
