Whenever an applicant with a bankruptcy applies for a mortgage there are certain factors that will play a significant role in whether the client will get an approval. First and foremost, they must be fully discharged from the bankruptcy proceedings. A lender will not approve any mortgage funding without a copy of the bankruptcy discharge.

The lender will want to know the reason the applicant filed for bankruptcy. Was the bankruptcy a result of a marriage breakdown, a business failure or was the client truly irresponsible with their finances? Most lenders do recognize that bad things do happen to good people who deserve another chance. They will want to know that the circumstances that contributed to the bankruptcy have been rectified.

Most lenders will insist on waiting until two years have passed since the discharge before they will consider them for a mortgage. In most cases, they will also want to see that the client has re-established their credit during this time. Lenders will look for a minimum of two to four types of credit since the action occurred such as a credit card or a loan. The lender considering the application will scrutinized these accounts very closely to ensure that the applicant has paid these accounts responsibly since the bankruptcy. If there are any late payments during this time after the bankruptcy discharge, the lender will most certainly deny the application for a mortgage.

If, however, the applicant has not waited a full two years since discharge, it is still possible to obtain a mortgage. The client must still provide a copy of their discharge and will also have to be provide a much larger down payment should the mortgage be for the purpose of purchasing a property.

Most lenders who will loan money without waiting the usual two years will require fifteen to twenty five percent of the purchase price before they will consider granting a mortgage. This money must not be borrowed but must be funds from the applicant’s resources. A purchaser considering this type of mortgage must keep in mind that the lender views their application as a risk and will charge a higher interest rate based on this risk assessment.

Although claiming bankruptcy is not a favourable situation, it does not mean that obtaining mortgage financing is impossible.