Do you have any idea how long you have to wait to buy a house after a bankruptcy? — Or can you ever?
Yes, you can. And, no, you don’t have to wait a decade to try to get a home loan.
In this video, attorney Jen Koss delves into when you can buy a house after a bankruptcy.
Spoiler alert: it’s so much sooner than you think.
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When Can You Buy a House After a Bankruptcy?
A common question that arises when considering whether to file a bankruptcy is, “How soon after can you purchase a house?”
This Fact May Surprise You!
Let me start by first saying that there’s no law that restricts you from buying a house after filing a bankruptcy.
“Bankruptcy is not designed to ruin your personal or financial well-being. It’s designed to help you get back up on your feet faster.”
Filing a bankruptcy will not destroy your dream of one day owning a home. A bankruptcy is usually erased from your credit report about seven to 10 years after filing a bankruptcy, but that doesn’t mean that you cannot still apply for a home loan.
Here’s What the Pros Say…
Most professionals suggest waiting at least two years after filing a bankruptcy before applying for a home loan. This is partially because lenders often follow this guideline when considering whether to approve you. But again, there is no law restricting you from buying a home after filing a bankruptcy, so it can really depend on the lender.
Why You Should Consider Waiting 2 Years
However, the two years also gives you time to improve your credit score with successful payments.
You can use credit cards carefully during this time to help improve your credit score by paying off the entire balance each month. Many mortgage companies also consider 401Ks and retirement plan assets as positive factors toward repayment. A large down payment, of course, helps as well.
Ultimately, a good debt to income ratio will be favorable to you when applying for a home loan after your bankruptcy.