How do you qualify for a loan when ...?

My husband and I have been trying to buy a house for 2 years. We both pay our bills on time and make decent money. The problem is that a few years ago he co-signed for a house for his sister. She moved out and quit paying for it and no one informed him until 3 days before it was supposed to foreclose in his name. They said we had to pay $85,000 when he only cosigned originally for $50,000 or the mortgage company was going to sue. She had put all her credit card debts and her car loan on the mortgage. So he filed bankruptcy to avoid being sued for $85,000. Now all debt and credit is in my name which brought down my credit score and he has a bankruptcy on his credit report. We can't seem to find any bank that will loan us the money to buy a house because they say my debt versus income to not good enough and his name can't be on the house because of the bankruptcy. What can we do to buy a house?

How do you qualify for a loan when ...?

With a good credit score, little debt, good income, a little money put away somewhere (preferably at least 2 months mortgage payments), and 2 years out of bankruptcy your husband should be able to qualify for a home mortgage loan without too much trouble. Have you contacted a mortgage broker or a mortgage lender, other than traditional banks. A traditional bank will almost never approve someone in your husbands situation. An FHA lender will be able to get this loan done for you as well. If you don't have any money saved up then you may want to save up a little money for a down payment and/or some reserves at least.

How do you qualify for a loan when ...?

You didn't say how long it's been since your husband filed bankruptcy, but if he's been cleaning up his act since then, and you both have been keeping up on making timely payments to your creditors, a lender may consider making you a loan after 2 years from the date of the bankruptcy discharge. Have you tried any private lenders in your area? They usually have more programs available to them than banks, check around your neighborhood/friends/family and see what names come up. Are you in CA? Can you apply for a home loan on your own? I can at least give you a name of a contact I work with if you want; as a broker I am very dicriminating and work only with lenders I feel are thorough and work to my clients' best benefit. Lenders at this time are tightening their requirements; they are seeing a spike in foreclosures and many are reluctant to work with subprime loans.Otherwise, I think you may have to do what your husband did for his sister, which is to get a co-signer to help you out. I hope this helps

How do you qualify for a loan when ...?

Not much. Sadly, you screwed up that option when you helped his sister buy a house. The whole story is not coming out here. No lender can hold your husband liable and responsible for an amount greater than he co-signed for. You are not getting the correct story from your husband.

He either signed for more than he realized, or he's just not being upfront with you.

Lenders also do not wait until three days before a foreclosure to inform co-signers of their liability. There are laws specifying public notice to all involved concerning pending foreclosures. By law, he would have been given ample time to 'make good' on the loan for which he co-signed.

That being said, the damage is now done. He guaranteed a loan on which he then defaulted by declaration of bankruptcy. You will not find a lender in this mortgage market who will provide you a mortgage using his credit history. If you can't make it on YOUR credit file, you are going to have to wait until his file cleans up a bit, and that could take up to ten years.

How do you qualify for a loan when ...?

7 years is the magic number. Unless you have great credit and a lot of money to put down, you'll have to rent for another four years. Sorry!