How to Get Financing after Filing Bankruptcy

If you're thinking about buying a home but have declared bankruptcy in the past, don't give up hope. There are still ways for you to be able to find a loan, even if your credit history is less than sterling.

Lenders make various kinds of home loans, normally graded from "A" all the way down to "D." The more problems that show up on your credit report--slow pays, late pays, or even bankruptcy--the lower the grade of loan you'll be able to qualify for. If you're employed and have a relatively good income, you'll get better terms, even though you won't qualify for a "Grade A" loan. The longer you've been at your current job, the better, because it shows stability.

Here are some general rules about the qualifications lenders look for before giving consumers the various grades of home loans:

To qualify for an AA loan, lenders must see no late payments or any other difficulties when they look at your credit history for the past two years. First, we'll look at the top of the line loans, all in the A grade category.

To qualify for an A+ loan, you can only have one late payment in that two-year time period. An A- loan is available to borrowers whose credit report shows two or three late payments, and have at least two credit cards. Borrowers in the A category will normally be qualified for all the various perks that lenders offer, such as low interest loans and low down payments.

But if you've had a bankruptcy in the past, you're choices are more limited, and you'll generally need a larger down payment.

For instance, a grade B loan can be obtained by borrowers who've been at their jobs for a reasonable length of time in as little as 18 months after declaring bankruptcy, assuming that they've been able to reopen at least one line of credit during that time and kept it current. Usually the lender will require 15% down, and the best interest rate the borrower can generally get is 6-7%.

A grade C loan will require good, steady employment, and may be available within a similar time frame as a B grade loan. The interest rate is generally higher, currently at about 8.5%, and the down payment requirements are considerably higher. For instance, a lender will normally require 20% down on $300,000 house or 40% down on a $500,000 home.

You'll need a significant amount of down payment to qualify for a grade D home loan, as well, and the interest rate will normally run between 9.95-10.7%, depending on your overall credit score. If you're employed and your credit score is above 500, you can put down as little as 30% on a $300,000 home or 45% on a $450,000 house. If you're self-employed, however, you'll need 45% down just to buy a $250,000 home.

If you're hoping to purchase a home, talk to your local lender to see what their criteria are for their various grades of loans. Even if you've had a bankruptcy in your past, that doesn't mean you can't buy a home. It just means it may take some time, you'll need to establish a strong employment history, and you'll need to save more money for a down payment than if the bankruptcy hadn't occurred.

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.

Forget what you've been told about credit. Get the Credit You Need to Buy Real Estate. Visit Real Estate Credit Help Center: http://www.recredithelp.com

In downtown Manhattan, new condo developments offer owners both single-house-style privacy and luxe-building-style amenities.

Where others saw a ruin, the buyer of a house in Millburn — a former contractor — perceived buried charm.

A gated community on Coney Island surrounded by sandy beaches, Sea Gate has a suburban feel.

Two longtime loftmates appeared to be going their separate ways, but the hunt for new apartments landed them in the same building in Williamsburg.

In the weak economy, more buyers are being asked to shoulder the so-called flip tax.

West End Avenue and vicinity was once a stronghold of town houses. Three of the now-rare breed bear distinctive traces of the attentions of recent owners.

At River Pointe, a community in Manchester, N.J., solar technology that earns energy credits is a standard feature in each house.

Questions for a principal of the law firm Proskauer Rose and a co-chairman of the firm’s real estate division.

The wealthy and celebrities often buy property under limited liability companies, often with whimsical names.

Once a grand mansion steps from Central Park, it had fallen into disrepair. Now it is for sale for $8.95 million.

One in eight homeowners had household debt exceeding half the monthly income in 2008, a recent report says.

A parking space that comes with the lease; a condo building with no emergency reserve fund; a landlord’s liability in a burglary; dealing with fees on security deposits.

An art collector builds a nontraditional house in an Alpine village where life hasn’t changed that much in decades.

On Lake Waramaug, a converted boathouse has a stone foundation, a wraparound deck and direct access to the water.

A one-bedroom condo in Philadelphia, a three-bedroom bungalow in Tennessee and a two-bedroom house in Wisconsin.

A half-dozen buildings on Second Avenue will house ventilation equipment, disperse smoke and allow for evacuation from subway tunnels in emergencies.

Real estate investigation, a big business in a borough like Manhattan with plenty of rent-regulated apartments ripe for exploitation, has picked up in the past year.

Developers in Midtown are refurbishing older buildings, using tax credits and public financing, as much as they are building from scratch.

In today’s market, some New York brokers say they have never encountered so many demands from their clients, or so much hostility.

The actor Liam Neeson sold his two-bedroom apartment on Central Park West for $1.35 million.

Many economists believe that the days of banking on an asset that could only rise in value are gone for good.