By Cullen Canazares On Friday, January 26 th, 2018

How can I possibly buy a house after bankruptcy?

If you need to build credit after a bankruptcy, it is often a result of these kinds of circumstances:

  • An unplanned financial emergency (medical/health, natural disaster, legal, etc)
  • Habits that contributed to overspending
  • Risky or speculative investments
  • Target of financial hacking, cyber-theft, or other virtual crime
  • A combination of any or all of the above

Life delivers unexpected situations. We understand. And, we’re not here to judge you.

So, how can you buy a house after bankruptcy?

First of all - the great news:

Fannie Mae has reduced the mandatory waiting period before you can apply for a mortgage after a bankruptcy, short sale, or pre-foreclosure. In the past, borrowers had to wait 4 years before re-applying to get a mortgage. However, now borrowers can now re-apply for a loan just TWO years after a bankruptcy, short sale, or pre-foreclosure. So, you actually have the dilemma of being in a hurry to QUICKLY rebuild your credit so that you own a home sooner than you ever imagined. Every month counts, so get on the path to rebuilding a credit history as soon as you can.

5 Tips to help you buy a house after bankruptcy?

1) Get a co-signer. Even if you do not qualify for a loan on your own, a co-signer can help you borrow money. As a result, both you and your co-signer build a loan payment history. For example, a car loan is one typical situation where having a co-signer helps you walk off that car lot in your new car. Again, there are lenders who will reduce that overall cost of the loan

2) Become an authorized user on someone else’s credit card. Even if someone else pays for the credit card balance each month, adding you as a signer helps you build credit.

3) Apply for a secured credit card. Since you need to build credit with no credit, you need to establish yourself as a trustworthy person. If you do not have any credit history, you will need to start with a “secured” credit card. There are many lenders who can provide a secured credit card – but be sure to compare the terms of each. This is an area that requires much more detail than we discuss in this high-level article, but you can look at our other in-depth articles about Choosing the Right Secured Card, here. For example, some cards have fees that will forever cripple your ability to restore your credit, and that make ‘payday loans’ look good in comparison.

4) Apply for a credit-builder loan. You can build credit without credit by borrowing money where the lender guarantees to report your loan payment history to the credit bureaus. This helps you build a credit profile. A credit builder loan has many variable terms, so they can, too, vary in terms on their real ability to help you establish credit. We talk in-depth about Credit Builder Loans on this article.

#5 Are You Paying Rent?

Get credit for the rent you pay! This is where Rental Kharma comes to your aid. Unlike these other methods where someone has to first borrow money to build a credit history, Rental Kharma gets your rental history payments added to your credit report. This helps you get credit for PAST payments of rent, and boost your score 30-50 points. See what others say about getting credit for rent payments.

These FIVE strategies can help you buy a house after bankruptcy because each strategy helps you build a solid credit history (again). Now that you know that you can apply for a Fannie Mae backed mortgage within 2 years after a bankruptcy (or pre-foreclosure or short sale), you need to get back into building credit as soon as possible! Here are what others are saying about how to buy a house after bankruptcy:

Here, the experts at NerdWallet suggest how Rental Kharma can help you build credit, even if you do not have any credit payment history.