Meet Beverly and Ross: A bankruptcy does not have to be the end of the road to homeownership.
What Ross and Beverly Wanted
Ross and Beverly had built a life together and were ready to purchase their first home.
Ross was a working professional who had been self-employed when COVID arrived. His business was among those hit hard by the restrictions. He tried to keep the business operating, including taking on loans to cover costs, but eventually the financial burden became too much.
Ross declared bankruptcy, completed the process, received his discharge and began rebuilding his credit. By the time he and Beverly were ready to purchase, they believed they had done everything required to move forward.
Then their mortgage application was declined.
What We Discovered
The bankruptcy remained the obstacle. Russ could not qualify under the lender’s standard guidelines, which meant he could not be included on the mortgage or share ownership on title of the home with Beverly.
A mortgage application tells a financial story, and sometimes the numbers alone do not say enough. In Ross’s case, the circumstances leading to the bankruptcy mattered. Equally important was what happened afterwards, the discharge, his rebuilt credit, his current financial position and the stability he had established.
I presented the complete story to a lender and structured the application around where Ross and Beverly were today, rather than allowing one difficult period to define the entire application.
What Ross and Beverly Chose
We also had an important conversation about their down payment.
Like many first-time buyers, Ross and Beverly were considering using as much of their savings as possible to reach 20 percent down and avoid mortgage default insurance.
Avoiding the insurance premium can sound like the obvious choice. It is not always the better financial choice.
Buying a home comes with expenses that rarely appear neatly on the purchase contract. Moving costs, window coverings, furniture, tools, a lawnmower, the pizza party on moving day, a snow blower and dozens of smaller purchases can consume cash surprisingly quickly.
We decided that keeping some savings available after closing was more important than using every available dollar toward the down payment.
Their mortgage would be insured, which added a default insurance premium, but also provided access to a lower interest rate. More importantly, Ross and Beverly would move into their home with money remaining in the bank.
What It Gave Them
Ross and Beverly were able to purchase their first home together, with joint ownership, while maintaining a financial cushion for the expenses that came with the key going into the door.
Their story is also a reminder that bankruptcy or a consumer proposal does not necessarily close the door on homeownership.
Life happens. Businesses fail. Employment changes. Families encounter financial circumstances they never anticipated.
What matters to a lender is not only what happened, but why it happened, what you did afterwards and what your finances look like today.
Sometimes a mortgage application needs more than numbers on a page. It needs context.
And sometimes the better financial decision is not putting every available dollar into your home. Owning the home matters. Having enough breathing room to live in it matters more.
If you or someone you know could use some guidance, remember, this is a judgement-free space that allows you to discover potential.
