Getting a jumbo loan after bankruptcy can be more challenging than obtaining a conventional mortgage, as jumbo loans typically have stricter eligibility requirements. However, it’s not impossible, and your ability to secure a jumbo loan after bankruptcy will depend on various factors, including the type of bankruptcy, your credit history, and your financial situation.
Here are some steps to consider if you’re looking to obtain a jumbo loan after bankruptcy:
- Rebuild Your Credit: The most critical factor in getting a jumbo loan after bankruptcy is improving your credit score. Make sure to pay all of your bills on time, reduce your outstanding debt, and work on rebuilding your credit history. This may take time, but it’s essential to demonstrate responsible financial behavior.
- Choose the Right Time: Lenders may have waiting periods after a bankruptcy before they are willing to consider your application. The length of the waiting period depends on the type of bankruptcy (Chapter 7 or Chapter 13) and the lender’s specific requirements. Fortunately, there is no waiting period after a Chapter 7 with proper trade lines. With a Chapter 13, you will need 12 month of payments to qualify.
- Save for a Down Payment: Jumbo loans often require larger down payments compared to conventional mortgages. Plan to save a substantial amount of money to put down on the home. A larger down payment can make you a more attractive borrower and improve your chances of approval.
- Demonstrate Stable Income: Lenders want to see a stable source of income. You’ll need to prove that you have a steady job or business income and that you can afford the monthly mortgage payments.
- Work with a Mortgage Broker: A mortgage broker can help you find lenders who may be willing to work with borrowers who have a bankruptcy on their record. They can also guide you through the application process and help you find the best loan terms.
- Be Prepared to Explain the Bankruptcy: During the loan application process, you may need to provide an explanation for the bankruptcy. Be ready to explain the circumstances that led to the bankruptcy and how you’ve taken steps to avoid similar financial issues in the future.
Keep in mind that while it’s possible to obtain a jumbo loan after bankruptcy, it may come with higher interest rates and stricter terms compared to borrowers with clean credit histories. A mortgage broker can help you find lenders who may be willing to work with borrowers who have a bankruptcy on their record.
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