Can you still get approved for a mortgage loan after a bankruptcy? The answer is yes. While a bankruptcy is a negative reflection of your credit worthiness, the key to re-establishing or improving credit history is obtaining new lines of credit after a bankruptcy. Thus, several lenders are willing to offer loans to individuals with a bankruptcy. Buying a home after a bankruptcy is slightly different than obtaining a new credit card. The loan is secured by the property or home. Therefore, if you refuse to pay the mortgage, the lender forecloses on the property, and re-sells to recoup their money.

Wait Two Years Before Applying for Mortgage

Some mortgage lenders recommend that individuals filing bankruptcy wait at least two years before applying for a mortgage. This allows adequate time for the person to rebuild their credit history and obtain a reasonable interest rate. During this two year period, you should open at least three new credit accounts. Pay creditors before the due date, and keep balances low. A good payment history following a bankruptcy is the best cure for a bad credit report. As your credit rating improves, other lenders will have more confidence in your willingness to repay loans, and offer low rates.

Furthermore, it is possible to obtain a mortgage loan one day after a bankruptcy. Various lenders offer special loan programs for newly bankrupt individuals. However, purchasing a home immediately following a discharge does not guarantee a low interest rate. Moreover, you may be required to have a down payment. Typical down payments are 3% to 5%. Individuals applying for a mortgage shortly after a discharge may need a down payment of 20%. To avoid higher fees, put off buying a home for 1 or 2 years, and use this time to rebuild your credit.

Mortgage Brokers

When the time comes to apply for a mortgage loan, consider working with a mortgage broker. Brokers have access to various lenders who specialize in granting loans to individuals with poor credit and bankruptcies. If it has been two years since the discharge, and you have a good payment history with creditors following your discharge, you are able to qualify for a mortgage loan with 100% financing and a reasonable interest rate. After submitting an application through a mortgage broker, you will receive quotes from several lenders competing for your business.