How to find a mortgage after repossession

Written by valencia higuera
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How to find a mortgage after repossession
Realise your dream of ownership after a repossession (Martin Poole/Lifesize/Getty Images)

It's challenging to secure a home loan after your car or other property has been repossessed. Mortgage lenders checking your credit history to see if you qualify for a loan will notice the repossession and proceed with caution. A past repossession indicates financial and credit problems, so lenders will classify you as a "high risk applicant." Still, there are ways to improve your chances of getting a mortgage approval.

Skill level:


  1. 1

    Maintain good credit after the repossession to help you get a mortgage loan. Quickly begin improving your credit score after the repossession to improve your odds of getting a home loan. Pay remaining creditors on time every month and work to pay down your debts.

  2. 2

    Keep records of your income. Having sufficient income and steady employment can compensate for past credit problems. Be employed for at least two consecutive years and keep copies of W-2 statements for the previous two years.

  3. 3

    Generate cash for your down payment. Plan to spend money on a down payment if you are approved for a mortgage loan after a repossession. Down payments vary depending on the loan, ranging between 5 and 20 per cent of the sale price.

  4. 4

    Apply for an FHA home loan. Mortgages offered by the Federal Housing Administration help people with past credit problems, and you only need a credit score of 620. Discuss options with a broker or mortgage officer to see if you qualify for an FHA home loan.

Tips and warnings

  • FHA home loan lenders may require a two-year waiting period after a repossession before you can apply for a mortgage. They may also inquire about the circumstances that led up to the repossession.
  • Using a co-signer or joint applicant can help you acquire a home loan after a repossession.

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