If you have a bankruptcy on your credit report or are in a Chapter 13 bankruptcy, you may still qualify for a loan. If you are in Chapter 13 and have equity in your home, you may be able to refinance and pay off the Chapter 13 debt. Having the 13 debt paid will help your credit score over time and you may be able to refinance at a lower rate in a year or two.

You can refinance even if you are only 1 day out of a Chapter 7 Bankruptcy with some lenders. The more recent the bankruptcy, chances are the higher the rate and possibly the more unfavorable the terms of the loan. Many conforming lenders will now consider you for a conventional loan even as little as two years out of bankruptcy. You will most likely need some very strong compensating factors to have a good chance at being approved conforming. Some examples of compensating factors are good job time, liquid assets, lowering your loan term, low Debt to Income ratios, low LTV's and many others.

If you are currently in a bankruptcy or have had one within the past few years, your mortgage options become a little more limited. You will most likely need to take a loan which carries a slightly higher interest rate with variable features after a fixed amount of time. The benefit to doing this is that you are buying your home (investment), paying your mortgage on time (increasing your credit rating) which over time will allow you to refinance into a better program which will benefit you even more.

If you elect to take a higher rate loan because of bankruptcy, your upcoming payment history will be crucial to your future borrowing power and the interest rates your receive. A 2 year satisfactory payment history will do wonders for your credit score. Keep in mind that this will not be the case if you allow your other tradelines to become delinquent.

If you will be obtaining a mortgage in the next few months and you have previously had a bankruptcy now is a good time to look over your credit history and FICO score. Credit reports often contain outdated or mistaken accounts that are remnants of the bankruptcy and these accounts may have a significant negative influence on your credit scores. If the mistakes can be corrected soon enough you may save hundreds per month on your mortgage payment.

To qualify for a conforming loan a bankruptcy must have been discharged for 4 years or more. Keep in mind if it has been less than 4 years you may still qualify for Alt A and subprime loan programs.