Even if you have bruised credit, low credit scores, or simply a less than perfect payment history, you should still be able to qualify for a mortgage with preparation and the advice from a knowledgeable loan officer. An experienced and seasoned loan officer should be able to review your credit report and then create a step-by-step plan for you to repair and improve your credit. Even if you have had a bankruptcy, foreclosure, or auto repossession you should be able to obtain a mortgage as long as you are willing to put in the time and effort needed to bring your credit up to acceptable standards. Fortunately, lenders look at more than just a credit score when they evaluate a loan application; they look at several other factors, such as: employment stability, income, and down payment.

Bankruptcies and foreclosures are often caused by a life changing event. Your lender may require you to document why you were unable to meet your financial obligations. Some of the main reasons that bankruptcies and foreclosures occur are the result of one-time occurrences, such as: job loss, unexpected excessive medical bills, and divorce. There are strict guidelines for mortgage financing after a bankruptcy or a foreclosure. But depending on the type of loan, an individual may qualify in as little as one year after filing for bankruptcy or three years after a foreclosure.

Chapter 7 is the most common personal bankruptcy type in the United States. For this bankruptcy option, the waiting period after bankruptcy discharge by mortgage types are as follows: conventional mortgages require four years, USDA mortgages require three years, and FHA and VA mortgages require two years after discharge. The Chapter 13 bankruptcy option requires the borrower (debtor) to enter into a repayment plan for three to five years. For this bankruptcy type, conventional mortgage guidelines require a minimum waiting period of two years from the discharge date, whereas: FHA, USDA, and VA guidelines allow mortgage financing as soon as twelve months after the bankruptcy discharge. Although, if you are still in the bankruptcy repayment period, you will need court permission to obtain a mortgage.

If you have had a foreclosure, deed-in-lieu, or short sale, the standard minimum waiting periods per mortgage type are as follows: conventional financing four years, FHA financing three years, VA financing three years, and USDA financing three years. Although, if the foreclosure was due to extenuating circumstances, the waiting period to qualifying for a mortgage could be less.

When obtaining a mortgage after a bankruptcy or foreclosure lenders will look closely at your post-bankruptcy credit history. Reestablishing credit is one of the most important factors after a bankruptcy or foreclosure. As soon as your bankruptcy has been discharged or if you filed for a chapter 13 bankruptcy and have started making your court scheduled payments, you should be actively involved in re-building your credit. So, it is important to check your credit activity and scores on a regular basis. Each time you reviewed your credit report, you should dispute any inaccurate information, resolve or dispute any derogatory credit, open new credit, and continue to pay your bills on-time.

Your lender will require a copy of your foreclosure paperwork, bankruptcy schedules, and discharge paper; in addition they will need a detailed letter of explanation documenting the reason for the derogatory credit event. To prove you have reestablished your credit, lenders will also require at least two open lines of credit showing that you have made the past twelve months payments on-time. This will show the lender that you are now able to manage your credit. For credit cards (revolving credit), you can maximize your credit scores by keeping your balance(s) under 30% of their available credit limit(s). Keep in-mind, that credit is just one factor used by lenders to determine if a mortgage loan should be approved. Lenders will also consider: down payment, income, employment history, and income stability as factors for approval.