If you have had to declare bankruptcy in the past and do not have the ability to pay for a home in full, it is possible that you will face difficulty buying a home. You may not qualify for some types of mortgage loans because of lenders’ concerns regarding repayment. However, it is still quite possible to purchase a home after bankruptcy, under the right circumstances.

One option for buying a home after you have declared bankruptcy is to apply for a Federal Housing Administration mortgage loan. According to FHA.gov, these are not actually loans provided by the federal government; they are insured by the government so that the lender (bank) will receive compensation if the home buyer becomes unable to pay. This way, the lender is not put at risk, so they have greater ability to issue a loan. Also, unlike some methods of buying a residence after bankruptcy, Federal Housing Administration loans do not require a large down-payment to qualify.

It may also be possible to qualify for a mortgage loan if you are willing to pay higher rates and/or a large down-payment. This should only be considered if your income is consistent and high enough to give you the ability to pay such rates; reports of many property owners defaulting on high-rate mortgages of this type have appeared in the news recently (August 2007). Such mortgages are often referred to as “subprime” loans. As with all types of mortgages, you are more likely to be approved if it has been a longer period of time since you declared bankruptcy.

Another possible method for buying a home after bankruptcy is owner financing. With owner financed home purchases, the individual owner selling the property determines whether or not to approve the home buyer. Some owners specifically state that they will consider financing buyers with bankruptcy and/or a poor credit history. A search for “owner financing” on the CraigsList.org housing section for your area will usually produce a number of listings with sellers willing to offer this. The ability to obtain such financing is greatly enhanced if you are able to pay a large down-payment, thus reducing risk faced by the seller.

Overall, buying a home after bankruptcy is very possible but likely to require some additional steps and/or extra expense. Using one or more of the above-mentioned options is an ability of most buyers, but should only be implemented after careful research and consideration so as to avoid future financial difficulties.