Have a Bankruptcy on Your Record? Here’s What to Know About Buying a Home

  • Heather Smith
  • 07/8/22

There’s no denying that bankruptcy is a serious financial challenge. But filing for bankruptcy doesn’t have to keep you from successfully applying for a mortgage; you just need to know how to navigate the process.

So how, exactly, do you do that?

recent article from realtor.com outlined tips for people who are looking to buy a home following a bankruptcy, including:

  • Understand you may need to wait. Most people will have to wait a certain stretch of time after filing for bankruptcy to apply for a mortgage—which can range from one year (for FHA loans) to two to four years (for traditional lenders). If you’ve recently filed for bankruptcy, do your research to see how long your lender will want you to wait before they’ll consider your loan application.
  • Take the time to build back up your credit. Filing for bankruptcy negatively impacts your credit score—so you’ll want to do everything you can to build it back up before applying for a mortgage. Apply for a few revolving lines of credit, pay your bills on time every month, and keep your balances low to help boost your score.
  • The more documentation you can provide, the better. If you filed bankruptcy due to an unforeseen, negative, or extenuating circumstance that kept you from being able to pay your bills—such as a serious illness or the death of a spouse—lenders may be more willing to work with you. Before you apply for your home loan, write a detailed letter explaining the circumstances behind your bankruptcy, and then submit that letter with documentation supporting your claims (like a note from your doctor or a death certificate).

Work With Heather

For most families, choosing a new home is the biggest financial decision they will ever make. There are many complicated decisions involved in choosing a home. As one of the top real estate professionals in the local market, I'll negotiate the best prices and terms for you and answer all of your questions as they arise.

Let's Connect