Is a Land Home Loan Under Bankruptcy Possible?

A land home loan is a lending vehicle meant to finance the purchase of property on which to build a home. This type of loan will generally include the money to buy the land and finance construction of the home. Obtaining this type of funding when bankruptcy is on a person's record can be extremely difficult, but it is not out of the question.

The Stage of Bankruptcy Matters

It is often recommended that people not seek out a land home loan prior to a bankruptcy discharge. The in-progress nature of bankruptcy proceedings can make financing anything, especially a home, more difficult. Once a bankruptcy has been discharged, however, the borrower's debt to income ratio will improve and this can actually help with financing in some cases.

Preparations Matter

If a land home loan is desired following bankruptcy discharge, there are some things borrowers can do to increase their chances of approval. They include:

  •  selecting property that is already improved and ready for development
  • coming up with a large down payment
  •  seeking out a co-borrower

Land home loan financing after bankruptcy is difficult to obtain, but not necessarily impossible. The right preparation can make a difference.


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