USDA After a Bankruptcy

Getting a USDA home loan 2 years after a bankruptcy is possible per USDA guidelines. It may even be possible one year out of a chapter 13 bankruptcy! Although this is possible per USDA guidelines, you will still need to cover any overlays from the lender.  First and foremost, the underwriter understands life happens; nobody wants to go through bankruptcy. However, they will look upon your history after the bankruptcy. This means no delinquent events, such as late payments, or collections. Second, the underwriter will want to see some form of reestablished credit. They want to know you will be paying your mortgage on time, every month, for the next 30 years.  The best kind is a revolving account such as a credit card, instead of an installment loan (such as a car loan). The reason for this is because when you finish your last car loan payment, the account closes out. The account will no longer report to the credit bureaus, in turn help you out. The same is true if you refinance anything, it will close out the account and start a brand new account.  This is why a revolving account is so important. It will keep reporting even if you have a zero balance, and establish the credit history we all are looking for. Lastly, the underwriter is going to want to see verifiable form of rent. This would include canceled checks, or direct deposits.  They are unlikely to take receipts from a private landlord because anyone could write a receipt.  All in all, getting a USDA home loan is possible, one year removed from a bankruptcy, but you will need to insure that you have established some credit with no delinquent accounts, and pay your rent with the verifiable form. Of course, each file is a case by case basis. If you want more information, please don’t hesitate to give us a call and a USDA expert will take a look at your specific situation

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