Post Bankrupt Mortgage Financing

“Can You Get A Home Mortgage Financing From A Bank If You’ve Ever Been Bankrupt?”

Residential mortgages or home mortgages for post bankrupt applicants can be challenging, but not impossible to obtain.

In fact, depending on where you’re now at after bankruptcy, you may even be able to qualify for a home mortgage loan through a major bank for a real estate purchase. The trick is satisfying all the criteria they will have for someone that has had a bankruptcy in the past. Secondary banks and trust companies also consider these applications, all with their own requirements for getting an approval granted. In the event that you cannot qualify for an institutional mortgage of any type, there still remains private mortgages as an option until you are able to satisfy all the credit requirements associated with cheaper forms of money.

To give you a better idea of what it would take to get a home mortgage or bad credit mortgage from a bank after bankruptcy, here is a list of fairly standard requirements common to most front line mortgage lines.

  • One previous bankruptcy.  Only one instance of prior bankruptcy will be considered and the applicant must be discharged from the bankruptcy for at least two years.
  • Reason for bankruptcy.  The lender may require that the bankruptcy was caused by unplanned event such as divorce or business failure versus mismanagement of funds.  The amount must also be for a material amount which in most cases must be more than $50,000.
  • Source of funds. The person applying for the mortgage must be able to verify the down payment and closing costs from their own resources and cannot pledge these as a gift from someone else.
  • Credit.  Since the bankruptcy, there are no negative credit events and the applicant has re-established credit through a bank issued credit card or loan.
  • Losses.  For a bank to consider a post bankruptcy application for mortgage financing, the bank or lender in question will not have lost money as a result of the bankruptcy.

Each lender will have different variations around these requirements, but the bottom line is that if an applicant has worked hard to re-establish earnings and credit after bankruptcy, there is a good chance that an institutional mortgage can still be secured at market rates and terms.  One point to mention is that listed rules or requirements are for home purchases, not mortgage refinancing, with is another kettle of fish all together.

If you don’t quite meet these criteria today, within 6 months to a year you may, provided that you focus in on these basic requirements.

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About the Author Joe Walsh

I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel