How can I get a home loan within 2 years of bankruptcy?
Your only option might be finding a seller-financed property with a motivated seller who is willing to take the risk of loaning you money. However, be prepared to pay a hefty rate on that loan if you can even pull it off. There are a few loan programs that grant exceptions to bankruptcy requirements in the event of extenuating circumstances that can be proven to be outside of your control (i.e. massive medical bills that you used bankruptcy to settle, etc.) however, in order to make the case for this exemption, you would need to make a strong case for your solvency, shown the ability to re-establish your credit reputation since the discharge of your bankruptcy, and would almost certainly have to go through a bank that offers manual underwriting. Additionally, if you are Native American, the HUD-184 program is a great option for your situation as it allows for a wide latitude in terms of underwriter discretion and is always manually underwritten as there is no automated underwriting system developed for the loan program. There are several great lenders that offer nationwide financing (as long as you're in a HUD-184 eligible area) and would be a great potential solution if you meet the qualifying parameter of being Native American.
How realistic is it that I will be able to get a home within the 250,000 range in the next year or so?  Very unlikely in the next year.  The debt/income ratio isn't good enough, and your credit score needs to show at least a year of regular payments without late or default issues before you can start asking for mortgages in this range. You don't mention how long you've been employed at these incomes, this can also count against you if you haven't both been employed for a full year at these incomes. They will look even more unfavorably on the employment situation if they aren't both full time jobs, although if you have a full year's worth of paychecks showing the income is regular then that might mitigate the full time/part time issue. next year or so? If you pay down your high interest debt (car, credit cards), and maintain employment (keep your check stubs and tax returns, the loan officer will want copies), then there's a slight chance. And, from this quick snap shot of our finances, does it look like we would be able to qualify for a USDA loan? Probably not.  Mostly for the same reasons - the only time a USDA loan helps is when you would be able to get a regular loan if you had the down payment. Even with an available down payment of 50k, you wouldn't be able to get a regular loan, therefore it's unlikely that you'd qualify for a USDA loan. If you are anxious to get into a house, choose something much smaller, in the 100k-150k range. It would improve your debt/loan ratio enough that you might then qualify for a USDA loan.  However, I think you'd still have issues if you haven't both been employed at this rate of income for at least a year, and have made regular payments on all your debts for at least a year. I'll echo what others have suggested, though, strengthen your credit, eliminate as much of your high interest debt as you can (car, credit cards), and keep your jobs for a year or two.  Start a savings plan so you can contribute a small down payment - at least 3-5% of the desired home price - when you are in a better position to buy. During this time keep track of your paycheck stubs, you may need them to prove income over the time period your loan officer will request. Note that even with a USDA loan you still have to pay closing costs, and those can run several thousand dollars, so don't expect to be able to come to the table with no cash. Lastly, there's good reason to be very conservative regarding house cost and size.  If you can, consider buying the house as if you only had the 46k per year.  Move the debt to the person making the lower income, and if you buy the house in the name of the person only making 46k per year, then the debt/loan ratio looks very positive.  Further it may be that the credit history of that person is better, and the employment history is better.  If one of you has better history in these ways, then you might have a better chance if only one of you buys the house.  Banks can't tell you about this, but it does work.  Keep in mind, though, that if you two part ways it could be very unhappy since one would be left with all the debt and the house would be in the other's name.  Not a great situation to be in, so make sure that you both carefully consider the risks associated with the decisions made. Yes this! Unions are what ruined the German economy and put them at the bottom of the list of world manufacturers. They are bleeding so many jobs to China  and south east Asia experts are predicting they won't have any manufacturing sector jobs left within the year. This is going to exacerbate Germany's already sky high unemployment rate and god knows how they are going to pay off their enormous national debt.  On another point I just don't understand how we allow police and fire unions as they don't make those jobs any safer and just end up costing the tax payers more money. If it weren't for them we could pay our police and fire fighters minimum wages. That would equate to about a hundred dollars in tax savings for each and every property owner in a municipality.  Furthermore the rights of the workers are best represented by their employers and not an expensive, corrupt union. You can clearly see the efficiency with which large employers like Flour Daniels takes care of their non-union employees. Sure the non-union people have a much higher medical debt load, less home ownership and more frequent bankruptcies due to unpaid medical debt but that is not without its advantages. A few years ago I had a 5 year car loan. I wanted to prepay it after 2 years and I asked this question to the lender. I expected a reduction in the interest attached to the car loan since it didn't go the full 5 years. They basically told me I was crazy and the balance owed was the full amount of the 5 year car loan. This sounds like you either got a bad car loan (i.e. pay all the interest first before paying any principal), a crooked lender, or you were misunderstood.  Most consumer loans (both car loans and mortgages) reduce the amount of interest you pay (not the _percentage) as you pay down principal. The amount of interest of each payment is computed by multiplying the balance owed by the periodic interest rate (e.g. if your loan is at 12% annual interest you'll pay 1% of the remaining principal each month). Although that's the most common loan structure, there are others that are more complex and less friendly to the consumer. Typically those are used when credit is an issue and the lender wants to make sure they get as much interest up front as they can, and can recover the principal through a repossession or foreclosure. It sounds like you got a precomputed interest loan.  With these loans, the amount of interest you'd pay if you paid through the life of the loan is computed and added to the principal to get a total loan balance. You are required to pay back that entire amount, regardless of whether you pay early or not. You could still pay it early just to get that monkey off your back, but you may not save any interest.   You are not crazy to think that you should be able to save on interest, though, as that's how normal loans work.   Next time you need to borrow money, make sure you understand the terms of the loan (and if you don't, ask someone else to help you). Or just save up cash and don't borrow money ;) Whenever one takes a distribution from an IRA, it cannot be put back into an IRA unless one is doing something like (a) take a distribution from the IRA as a rollover where the owner gets cash in hand to be sent to the new IRA custodian within 60 days, and (b) deposit the money with the new IRA custodian within the prescribed time period. For distributions taken by a first-time home purchaser to buy or rebuild a home, the money can be put back and treated as a rollover up to 120 days after receiving it (Publication 590, page 51, column 2). Note also that distributions taken for  first-time homebuying lose their Qualified Distribution status if not paid to the seller (or bank, for closing costs etc) within 120 days of receipt of the distribution (Publication 590, page 51, column 1). However, one  cannot take a distribution from an IRA, no matter whether the sum comes from contributions, earnings, or previous rollovers, and put the money back into the IRA a few years down the road as having been unnecessarily withdrawn.   What you want to do -- take out some money out of your IRA to buy a house and  put the money back into the IRA later -- is effectively an interest-free loan from your IRA (even if you don't call it a loan or think of it as a loan), and you  are not allowed to do this (except in the special circumstances described above). On the other hand, unless you have a very atypical 401k plan, you can take a loan from your 401k (you will have to pay interest, though) and pay it back over several years. Thus, taking a loan from your 401k might be something you could consider as an alternative to withdrawing money from your IRA. But be aware that there are restrictions on how much you can borrow from your 401k, and usually you cannot withdraw employer match money, even if it has vested. Also, the loan becomes immediately due upon termination of employment, even if the termination was involuntary (i.e. the  employee was laid off or fired). These are the things to focus on... do not put yourself in debt with a car, there are other better solutions.  1) Get a credit card (Unless you already have one) -Research this and get the best cash back or points card you can get at the best rate.  - Start with buying gas and groceries every month do not run the balance up. - Pay the card off every single month. (THIS IS IMPORTANT) - Never carry a balance above 25% of your credit limit.  - Every 8 months or so call your credit card company and ask for a credit line increase. They should be able to do this WITHOUT pulling your credit you are only looking for the automatic increment that they can automatically approve. This will help increase your available credit and will help keep your credit utilization low. Only do this is you are successfully doing the other bullet points above.  2) Pay all of your bills on time, this includes everything from water, electricity, phone bill, etc. never be late. Setup automatic payments if you can.  3) Minimize the number of hard credit inquiries. -This is particularly important when you are looking for your mortgage lender. Do not let them pull your credit automatically. You should be able to provide them your credit score and other information and get quotes from those lenders. Do not let them tell you then can't do this... they can.  4)Strategically plan when you close a credit line, closing them will do two things, lower your credit limit often times increasing your credit utilization, and it may hurt your average age of credit. Open one credit card and keep it forever.  *Note: Credit Karma is a great tool, you should check your score monthly and see how your efforts are influencing your score. I also like Citi credit cards because they will provide you monthly with your FICO Score which Credit Karma will only provide TransUnion and Equifax.  This is educational information and you should consider talking to a banker/lender who can also give you more detailed instructions on how to get your credit improved so that they can approve you for a loan.  Many people can get their score above 720 in 1-2 years time going from no credit doing the steps described above. It does take time be patient and don't fall for gimmicks. I think you are running into multiple problems here: All these together look like a high risk to a bank, especially right now with companies being reluctant to hire full-time employees. Looking at it from their perspective, the last thing they need right now is another potential foreclosure on their books. BTW, if it is a consolation, I had to prove 2 years of continuous employment (used to be a freelancer) before the local credit union would consider giving me a mortgage. We missed out on a couple of good deals because of that, too. "Pete B mentioned adjusting your payments using the Debt Snowball Method and I agree it is one possible solution, another being the Debt Avalanche Method. Here is a link that describes both.  There was a time in my past when I had 17 credit lines open totaling about $12,000. If I had paid them the way the banks asked (minimum monthly payments) it would have taken decades to pay off. Then I was shown these two techniques and as a result I was able pay them down rapidly and close all but 2 lines within 5 years. Like others I am going to say that if you already own your house free and clear never Never NEVER put a loan on it unless the loan is (a) to improve the house, or (b) a life & death emergency. If you get sick or fired and miss even a single payment on a HELOC you could lose your house forever and that just plain sucks. Not only will you then be forced into renting a place (money down the drain) but your credit rating will take such a huge hit it will be years (if ever) before you can even try and buy a new home.  Debts come and go, as do the ""toys"" and other things we buy with that debt. Homes are security & stability for tomorrow. Never give that up for a little ease & comfort today. UPDATE: I had to go looking for it but here is some software that I used all those years ago to figure out my strategy for paying down all my credit bills. It's a bit clunky but it's super easy to use plus it has some other variations on snowball and avalanche methods as well. I definitely found it helpful." First, many banks do not keep the loan. Even if they send you a payment notice and process the monthly payment, there's still a good chance the loan itself was packed up and sold to investors. Collateralizing mortgages, in and of itself, is not inherently dangerous. But the loan definitely needs a house behind it. If you found a bank that keeps its loans, it would be a tough sell. You'd be asking them to trust that you've chosen the right number to match up with the house you intend to buy. And then they'd need to have another round of processing to turn this into a loan with normal collateral (i.e. put a lien on the house and tie them together.)