If you have a bankruptcy this is not automatically mean that you cannot be approved for a mortgage. This is a myth which keeps many people from applying for a home loan when in fact they would actually would qualify if they did.

One of the biggest myths is that you have to wait seven years after bankruptcy before you can get a mortgage. The real truth is that home loans can be issued even after one day of being declared bankrupt. One off the advantages for the diversification of the lending market is that more and more flexibility and options have been built in so that nowadays there are home loans for people with good credit and home loans for people with bad credit, and even home loans for people who have been bankrupt.

Applying for loans under Fannie Mae, Freddie Mac, FHA and VA all have guidelines issued under law which make provisions for lenders to issue loans and that bankruptcy is at least 48 months old. These government programs can only approve a mortgage loan when the bankruptcy is two years old.

The guidelines state that once this period of bankruptcy is over the applicant can re-establish their credit rating through the issue of a new credit card or through paying back something like a car loan.

There is actually a huge industry amongst lenders to cater specifically towards people trying to re-establish a good credit rating in order to apply for mortgages or loans. It is always advisable to go for a government home loan first and only if you are refused to look for other lenders or lending institutions.

The structure for buying homes has become a lot more flexible in recent years and now days it’s actually easier than ever before to buy a home with bad credit, or even other things such as cars and boats. Sure you WILL pay more and your interest rates will be higher so you’ll definitely won’t get the best loan rates but the point is that it’s not a total dead end if you have a bad credit history – there are lenders who will still approve you for a home loan.

Examples of situations where you could find yourself in trouble would be if your FICO score is really low or perhaps you are self employed and cannot provide proof of your income or tax returns.

One possibility is to do it under “lease options rent to own”. You don’t need to have a great FICO credit score, it can be 400 or 500 and you’ll still be able to use this option. The thing about ‘rent-to-own’ is that the playing field is level, it really doesn’t matter if you’re earning less than 50k or 200k a year – with this scheme, it’s all the same.