Tick Tock – How long do you have to wait after a foreclosure, bankruptcy, or short sale?

If you have filed bankruptcy, been foreclosed on or had a short sale you might feel like it will be an eternity until you are able to purchase a home again. That is not the case!

Below I have laid out the waiting periods by the type of loan you wish to use, NOT the type of loan you previously had.

Conventional

Foreclosure       7 years

3 years if there were acceptable extenuating circumstances and

borrower must have 10% down payment. Owner occupied only

Short Sale         7 years if borrower with less than 10% down payment

                        4 years if borrower with 10% down payment

                        2 years with 20% down payment

                        2 years with acceptable extenuating circumstances

Bankruptcy       4 years from discharge date

Chapter  7         2 years from discharge date with acceptable extenuating circumstances

Bankruptcy       4 years from dismissal date

Chapter 13        2 years discharge date

Conventional examples of acceptable extenuating circumstances (must be verified and documented): Nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.

FHA

Foreclosure         3 years

  Less than 2 years, not less than 12 months if there were acceptable

  extenuating circumstances

Short Sale            3 years

   No waiting period if borrower had no late payments on any

   mortgages or consumer debts within the 12 month period preceding

   the short sale and they are not taking advantage of declining market

   conditions

Bankruptcy          2 years from discharge date with re-established credit or no new

Chapter 7             credit obligations

                           Less than 2 years, but not less than 12 months from the date of

                           discharge if there were acceptable extenuating circumstances

Bankruptcy          1 year payout period under bankruptcy has elapsed and borrower’s

Chapter 13           payment performance has been satisfactory and all required  

                           payments made on time

FHA examples of acceptable extenuating circumstances (must be verified and documented): Serious illness or death of a wage earner. Divorce and the inability to sell a property due to a job transfer or relocation to another area does not qualify as an acceptable extenuating circumstance.

VA

Foreclosure         2 years

                          12-23 months if there were acceptable extenuating circumstances

Short Sale           2 years

                          No waiting period if borrower had no late payments on any

                          mortgages or consumer debts within the 12 month period preceding

                          the short sale and they are not taking advantage of declining market 

                          conditions

Bankruptcy         2 years from date of discharge

Chapter 7           12-23 months from date of discharge if credit re-established and paid

                          as agreed and was caused by acceptable extenuating circumstances

Bankruptcy         1 year payout period under bankruptcy has elapsed and borrower’s

Chapter 13          payment performance has been satisfactory and all required payments

                          made on time

VA examples of acceptable extenuating circumstances (must be verified and documented): Unemployment, prolonged strikes, medical bills not covered by insurance, etc. Divorce is not viewed as beyond control of the borrower and/or spouse.

If you have faced a bankruptcy, foreclosure or short sale, remember there is hope to becoming a homeowner again!

Contact your lender for more detailed guidelines.