2016 Buy Again After Bankruptcy, Short Sale, Foreclosure or DIL

by on 1.6.16 in Boomerang Buyers

NOTE:  This page was first created in February, 2011, and is updated as new guidelines are released.  This page is monitored by Boomerang Buyer experts that understand the guidelines, and have successfully guided countless families back into homeownership after significant financial hardship.

2016 FHA Guidelines

  • Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.  You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
  • Foreclosure – You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.
  • Short Sale / Deed in Lieu – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.
  • Credit must be re-established no late payments in past 12-24 months, depending on hardship

Application Date must be after the above waiting period to be eligible for FHA financing after hardship.

Click Here for Current Interest Rates

2016 VA Guidelines

  • Bankruptcy Ch 7 – You may apply for a VA guaranteed loan TWO (2) years after a chapter 7 Bankruptcy
  • Bankruptcy Ch 13 – If you have finished making all payments satisfactorily, the lender may conclude that you have reestablished satisfactory credit.
    • If you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
  • Foreclosure / Deed in Lieu – You may apply for a VA guaranteed loan TWO (2) years after a foreclosure
  • Short Sale – VA does not recognize a short sale as a derogatory event.  If you are able to credit qualify for a VA loan, a short sale would not prevent you from being eligible for VA financing. – Updated 4/2016
  • Credit must be re-established with a minimum 620 credit score

Application Date must be after the above waiting period to be eligible for VA financing after hardship.

Click Here for Current Interest Rates

2016 USDA Guidelines

  • Bankruptcy – You may apply for a USDA rural loan THREE (3) years after the discharge of a Chapter 7 or 13 Bankruptcy
  • Foreclosure – You may apply for a USDA rural loan THREE (3) years after a Foreclosure
  • Short Sale / Deed in Lieu of Foreclosure – If you had big issues the deed in lieu of foreclosure will be viewed as a foreclosure and you would want to wait no less than 3 years if the score is under 640.  Over 640 your UW will make the call but typically not less than one year.
  • UPDATED 12/2014 – Mortgage debt included in Bankruptcy will go by BK discharge date, and and subsequent foreclosure will not count as an additional waiting period, as long as you are off title for any defaulted mortgages.
  • Link to 12/1/2014 USDA Guideline – HB-1-3555  Attachment 10-B  See Page 4 of 6

Date of Credit Approval must be after the above waiting period to be eligible for USDA financing after hardship.

Click Here for Current Interest Rates

2016 Conventional (Fannie Mae) Guidelines

  • Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, TWO (2) years from the discharge of a Chapter 13
  • Foreclosure – You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure –
    • UPDATED – Effective 7/29/2014:  Waiting period for subsequent foreclosure that was included in Bankruptcy is waived.  If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date.
    • UPDATED – Effective 8/16/2014:  Short Sale or Deed in Lieu of Foreclosure not included in a Bankruptcy has a new Waiting Period of FOUR (4) years from date your name is removed from title.  This replaces the ability to buy in 24 months with 20% down payment and minimum 680 credit score.
    • SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

Credit must be re-established with a minimum 620 credit score.

Click Here for Current Interest Rates

Fannie Mae has reduced waiting periods in cases of extenuating circumstances – The death of a primary wage earner seems to be the only one I have been able to identify up to this point.

Date of Credit Report must be after the above waiting period to be eligible for Conventional financing after hardship.

2016 Jumbo Mortgage Guidelines

  • Bankruptcy – You may apply for a Jumbo mortgage loan once any chapter of bankruptcy has been discharged for FOUR (4) years, FIVE (5) years if multiple bankruptcy occurs on credit profile.
  • Foreclosure – You may apply for a Jumbo mortgage loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure – You may apply for a Jumbo mortgage loan:
    • SEVEN (7) Years from Short Sale or Deed in Lieu of Foreclosure with Maximum 80% Loan to Value
    • NOTE: There are investors out there that will allow you to buy again in FOUR (4) years after a short sale, but expect higher rates, higher fees, and possibly larger down payment requirement.  Jumbo lenders have not yet loosened up the qualifying guidelines for buying after a hardship.
    • It may make financial sense to consider a portfolio Jumbo lender that offer high rates, so that you can take advantage of today’s market.  Once your short sale is seasoned, refinance into a more favorable, longer term loan.

NOTE:  If hardship is the result of an extenuating circumstance, waiting periods may be reduced.  Contact lender for details.

Click Here for Current Interest Rates

Portfolio Loans

We are beginning to see more and more portfolio loans in the market that have relaxed waiting periods for bankruptcy, foreclosure, short sale and deed in lieu of foreclosure.  These are not necessarily subprime loans, but they do often have higher interest rates, and higher closing costs.

Portfolio loans are offered by investors that are looking at other compensating factors, like high credit scores, low loan to value (larger down payments), and reserves.

Do not rule out a portfolio loan as a “bridge” to get you into your home until you reach your waiting period for refinancing into a loan with better terms.

Preparing to Buy Again

You should begin looking at your credit at least six (6) months before you are ready to buy again. Quite often there are things left over on your credit report that can delay your ability to qualify. With a little head start and good advice, you can get your credit in line, qualify for financing and buy again.

We specialize in these situations so feel free to drop me an email, call or leave a question below.

1645 comments
Bella187
Bella187

Hi Scott. I have a bankruptcy discharge date of 1/2009. Property included in bankruptcy has a clear title as of 7/2014. Do you know of any brokers or lenders near Cleveland, Oh that are familiar with programs I could qualify for?

ScottSchang
ScottSchang moderator

@Bella187 Hi Melinda, you would be eligible for conventional financing four years from the discharge of the bankruptcy.  When you say "clear title", was it a foreclosure, short sale or deed in lieu of foreclosure?

Send me an email to Scott@Findmywayhome.com and I can introduce you to someone that can help in OH :)

DapperDi
DapperDi

Hi Scott,

Foreclosed on a home in MI and mortgage was discharged in 2011. I also had a home equity loan (not line of credit) that was not discharged until September of 2014. Fico score is 740. Looking to finance a $110,000. mortgage in OH. Do you think a portfolio loan would be an alternative to waiting an extra year to go FHA on a loan? Would you have any other suggestions to secure a mortgage now, instead  of in 2017?

ScottSchang
ScottSchang moderator

@DapperDi  I am unclear about the events and the timelines from your description.  When you say "discharged" are you talking about a bankruptcy or just the fact that the foreclosure happened?  Also, was the home equity loan on the same home that was Foreclosed and mortgage.

IF the mortgage was discharged through a bankruptcy, did the foreclosure happen before or after the bankruptcy?

Sorry for all the questions.  I'm trying to wrap my head around all of the events and timelines so I can provide you with accurate options.

mininat
mininat

Good afternoon, I had a Chapter 7 bankruptcy that was discharged in June 2011, in that bankruptcy I included my home which went in foreclosure August 2015.  Am I able to get a conventional loan?  My credit score is in the low 700's.

ScottSchang
ScottSchang moderator

@mininat Yes, you would be eligible for Conventional financing with a minimum of 3% down (with income limits), or 5% down (with no income limits). 

What State are you in?  If you would like an introduction to a lender in your area that is familiar with these guidelines, shoot me an email to scott@findmywayhome.com and I will try to point you in the right direction.

Hope this helps? 

ejhilbert
ejhilbert

Scott,

Looking to purchase a new home, had a bankruptcy discharged in March of 2012. Still maintained current home, lender is saying title needs to be out of my name for 3 years to apply for new loan? Sort of confused with that answer. Not sure if it is right. Any help is appreciated.

Thanks

ScottSchang
ScottSchang moderator

@ejhilbert When you say "still maintained current home", does that mean that you've continued to make payments on-time on the mortgage that was included in the bankruptcy?  It's not necessarily true that you have to get rid of the current home, but it might be necessary in order to afford the payments on the new home.  The 3 year wait is not accurate necessarily.  

What State are you trying to buy in?  It sounds to me like this lender simply doesn't understand your situation.  I might be able to introduce you to someone that knows the guidelines and can help.

ScottSchang
ScottSchang moderator

@ejhilbert ok, that should be ok.  It sounds like you're eligible to buy now using Conventional financing.  I have a great lender in PA that is familiar with these guidelines and can help you run those numbers.

If you would like an introduction, shoot me an email to scott@findmywayhome.com

Relame42
Relame42

Scot,: I have a question regarding the following statement:  UPDATED – Effective 7/29/2014: Waiting period for subsequent foreclosure that was included in Bankruptcy is waived.  If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date.

The mortgage I defaulted was the reason why I filed for bankruptcy.  The bankruptcy was discharged in Feb, 2011.  Does this mean the foreclosure waiting period defaults to Feb. 2015?  The actual transfer of title took place on July 2014 due to the foreclosure backlog in Florida.  I will appreciate your help. 


ScottSchang
ScottSchang moderator

@Relame42 Yes, you are correct if you are applying for Conventional financing.  If you are using a FHA or VA loan, there is an additional waiting period from the foreclosure date.  I know lenders in FL that are familiar with this guidelines that can help.  If you are not currently working with a lender familiar with these programs, email me at scott@findmywayhome.com and I can introduce you to someone that can help.

ahicks004
ahicks004

Hi Scott,

Our foreclosure occurred 9 months ago in November of 2015, it was an FHA loan. My husband who is a veteran received his certificate of eligibility from the VA a few months ago, We are looking to do a VA home loan in the future. The foreclosure is not listed on his credit report so we went to a mortgage company to find out our options, we were pre approved since the credit report was good but when they ran the CAIVRS report the foreclosure came up. Can you please advise me how long after the FHA foreclosure do we have to wait until we can get a VA home loan?
Thank you so much for your help.


ahicks004
ahicks004

No bankruptcy. The foreclosure is not anywhere on his credit report. It only comes up on the caivrs database.

Thanks

ScottSchang
ScottSchang moderator

@ahicks004 VA underwriting guidelines state that it is unlikely that you would be approved in less than 24 months from the foreclosure date.  It sounds like you would be eligible in November 2017, which is much sooner than most other waiting periods.

Was the mortgage discharged through a bankruptcy by any chance?

Cheryl 30535
Cheryl 30535

My husband and I filed for Chapter 7 in Sept 2013 and were discharged Dec 2013. We had an fha loan that we did not reaffirmed, but we have continued to make payments. We moved in 2012 and it has been a rental property for 4 years. We are interested in purchasing again and I had a few questions. Do we need to sell the rental property to purchase again? We are 2 1/2 years out, so we have to go fha again. I read thatin order to have 2 FHA loans, the rental property must have 25% equity in order for it to not count in our monthly obligations. We are close, but not there. We want to sell the house, but not sure how long that will take. My question is, does the rental still count against us even if we are legally not liable for the debt? Should we pursue purchasing now or wait until the rental sells?

ScottSchang
ScottSchang moderator

@Cheryl 30535 there are a couple of FHA guidelines here that you will need to navigate.  As long as you've been reporting the rental income on your tax returns, you can use the rents from your Schedule E on your 1040's.

FHA recently came out with a guidelines that said that you cannot have 2 FHA loans if the homes are within 100 miles of each other.  Would the new home be 100 miles from the rental?

You might have me a little stumped on the 25% equity, because I know that is the case for a departing residence (rent current home and buy new one), but if you've been reporting it as non-owner for the past 4 years, I think you'll be able to use the rents to offset the payment.

I guess the million dollar question really is...can you qualify for the new home even with the full payment on the previous home?  If so, all of this is a moot point.

What State are you trying to buy in?

Cheryl 30535
Cheryl 30535

Thanks for answering so quickly! We are moving from Nashville, TN to Atlanta, GA. Our rental is also in GA, but is only about 75 miles away from where we want to buy. :( It is not a reasonable commute to go back to our original home. We have claimed our rental on taxes, so that is helpful to know I can count the rent as income for qualifying. My husband makes around 90k and we are looking at houses in the 240k and under range. Do you have a link to any online calculators to judge what we might qualify for? I have found a few, but get wildly varying answers.

ScottSchang
ScottSchang moderator

@Cheryl 30535 Any online calculator should be accurate if you're just calculating your principal and interest payments.  To know what your actual payment would be, I would speak with a loan officer.  They will be able to give you an accurate answer that takes all of the qualifying factors such as credit score, down payment and your liabilities.

If you need an introduction to a good lender in GA, shoot me an email to scott@findmywayhome.com and I can put you in touch with someone I know and trust.

Hope this helps?

jaminjackson77
jaminjackson77

Hi I went through a divorce and had to foreclose on my home in Colorado, the warranty deed for the sale after foreclosure is March 1, 2010.  The second mortgage company came after me later that year and I had to file bankruptcy in December of 2010. I bought a house in Utah where I now live last August 2015 and the lender said i had to go FHA so i did.  She said i would have to wait until 7 years after the warranty deed (March 1, 2010) to refinance conventional. Is that the case or is it 4 years since I filed bankruptcy on the second mortgage later that year 2010? Basically I am wanting to refinance my loan and get the rate down and want to know if i have to wait until March 1, 2017 or not. 

Thanks!

Jamin 

ScottSchang
ScottSchang moderator

@jaminjackson77 Hi Jamin, thank you for your question.  If the foreclosure occurred prior to the discharge of the bankruptcy, then yes, there is a 7 year wait from the date that title transferred to the new owner (bank).

The good news is that FHA allows you to refinance into a lower rate with very little paperwork, not income documentation, and no appraisal.  The only requirement is that you have made a minimum of 6 payments on the FHA loan, and you can lower the interest rate by a minimum .50%.  This is called a FHA streamline, and will most certainly give you a lower interest rate than a conventional loan.

If you do not have a lender that you trust, I can introduce you to someone that can help you with this.  Shoot me an email to Scott@findmywayhome.com and I'll make an introduction.

Hope this helps?

Chris_remodel
Chris_remodel

Hi Scott,

We are located in the western suburbs of Chicago, Illinois. My husband and I filed chapter 7 bk in 2010, our mortgage was not included and we reaffirmed (ch7 granted 5/2010). We then lost the home in foreclosure, action was filed in 2011, sale date and judge's deed was entered on 8/23/13. I've been operating under the presumption that my husband could file for an FHA backed loan after 8/23/13 (his credit score is currently 669, no debt, 65k salary at same job for last 18 years - my name will not be included, but that's another post entirely). I just pulled a copy of the deed and see it was recorded on 9/6/13. What date does he need to wait until to apply? And since this is such a confusing area, would you have any lenders you could recommend in our area? Thanks so much! 

ScottSchang
ScottSchang moderator

@Chris_remodel When using FHA financing, you cannot get a new FHA case number until after the waiting period.  You would have to apply after 9/6/2016.  If the foreclosed home was a FHA mortgage, this timeline could change.

I have an incredible lender in Illinois that is very familiar with these guidelines and can help.  Please send me an email to scott@findmywayhome.com and I will make an introduction.

TechieGuy2
TechieGuy2

I'm a little confused by the timeline for a new conventional mortgage after foreclosure.  Mine was in limbo for a while (conventional foreclosure), with last payment being made in Feb of 2010 however it wasn't sold/transfered until January of 2013.  Above it states (7) years from the time of sale (which would be Jan. 2020), however my Transunion report states the foreclosure is due to be removed in April of 2017.  Would I then quality for a conventional mortgage starting 4/2017 if the foreclosure was no longer on my credit report?  Thanks

ScottSchang
ScottSchang moderator

@TechieGuy2 Was the mortgage included in a bankruptcy?  If not, conventional is going to require a 7 year wait from the date your name is removed from title, that sounds like January 2013?  Whether the foreclosure shows on your credit report or not is not relevant, and will not affect your timelines.

Also, you would be eligible for FHA financing now, 3 years from the foreclosure date.

If you shoot me an email to scott@findmywayhome.com with the address to the foreclosed home,  I can look up the exact eligibility date for you.

Hope this helps?

AshleyMillar
AshleyMillar

It has been over 3 years since the discharge of our bankruptcy /foreclosure. We got pre-approved for an fha loan but now we are having a hiccup with getting off the federal government list of who cannot be lended to. My husband called the government part that deals with this and they are saying its from when the insurance was paid off which is 3 months after the discgarge. He is waiting for another call back on if it's possible to get removed. Have you heard of this issue? From our understanding we should be able to get a loan 3 years after the discharge date and the government workers are saying its after the insurance was paid which happens to be after the discharge date.

ScottSchang
ScottSchang moderator

@AshleyMillar Yes Ashley, unfortunately this is correct.  If the mortgage that was foreclosed was a FHA loan, then your waiting period starts from the date that the mortgage insurance claim was paid.  There is no way around this if you are trying to qualify for FHA financing, and conventional financing is going to be a 4 year wait from the BK.

AshleyMillar
AshleyMillar

What about the back to work program where we can prove out hardships was what caused the bankruptcy/foreclosure? I don't understand why some can get buy a house but we can't. I feel like we should be able to send them the proof to get our name off that no lender list.

ScottSchang
ScottSchang moderator

@AshleyMillar Back to work is incredibly difficult to qualify for, so much so, that I've never been able to do one myself.  I know there are some investors out there that will consider that program, but many will not.

I understand your frustration, and I am sorry you're just now finding this out.  Your lender never should have qualified you for this loan in the first place, they made a mistake.

ScottSchang
ScottSchang moderator

@jessycar78 FHA's back to work program is incredibly difficult to qualify for.  The fact that you were "fired" would probably make you not eligible for this extenuating circumstances exception.

The loss of income from you choosing to become self employed is not going to be considered as a "one time event that is completely outside your control".

Your realistic timeline looks like this.  To buy using FHA financing, you must be 3 years from the foreclosure date (if your name was still on title at the time of foreclosure), and 2 years from the discharge of your bankruptcy.  Sounds like you would be eligible for FHA in August 2017.

Hope this helps? 

AshleyMillar
AshleyMillar

We are in the oilfield and he was completely out of work for a year and put on the maxed amount for unemployment. It was enough to cover our mortgage and sent us into deep debt. He now is in a very stabled position and that Can't happen. I would think that's proof enough and he already has that information gathered.

Also our name was off the title September 2013 I believe.

I'm not fully understanding how it could be August 2017? That would be over 4 years from the discharge instead of 3?

ScottSchang
ScottSchang moderator

@AshleyMillar That sounds like you have a really good case for FHA's back to work program.  You're going to have to shop around for lenders that offer this program, because I know that many do not.

As far as waiting periods, you're getting the waiting periods confused with a couple of different programs.  The date you are eligible to buy again depends on the type of loan you are applying for.  FHA is going to count the BK, and the foreclosure as 2 separate events, with 2 separate waiting periods.  The waiting period if you're using FHA financing is 2 years from the discharge of the BK, and 3 years from a short sale, foreclosure, or deed in lieu of foreclosure.  In your case, since the foreclosed loan was an FHA loan, that 3 year waiting period does not begin until after the mortgage insurance claim is paid by HUD to your old lender.

If the foreclosure occurred in September 2013, then you're probably looking at October 2016 before you would be eligible for FHA financing.  If your lender offers the FHA back to work program, you should be eligible now.

Hope this helps?


AshleyMillar
AshleyMillar

You wrote August 2017 so that confused me. We already got pre approved and are in the loan process. We are literally verifying funds today and this came up. This is the last of the loan process and the government won't take our name off the list. The lender messed up...so your saying if the house was out of our name that would be a better date to go off of rather then the November date when the insurance was paid? We are supposed to be moving into our house August 24th so I want my husband to have the best argument he can provides the last bit of information and documents to try and get approved with the back to work program. Trying to understand this as a buyer is rough!

ScottSchang
ScottSchang moderator

@AshleyMillar August 2017 is would be for Conventional financing, 4 years from the BK discharge date, and they ignore the foreclosure date.

Trust me, this is confusing for lenders too, as you've discovered with your lender.  To be clear, if the mortgage that was foreclosed was a FHA insured loan, then you will have a 3 year waiting period from the date that the mortgage insurance claim is paid.  This is always after your name is removed from title.  If you think your name was removed in September, then you're probably looking at October to be eligible for "standard" FHA financing.

Right now, it seems your only option to close by August 24th would be to get an extenuating circumstances exception under the Back to Work program.  Unfortunately, if you do qualify for the back to work program, you're going to still have the challenge with getting your name cleared from CAIVRS (FHA MIP eligibility system).

hcornel1178
hcornel1178

We are in CA and looking to buy in an area with high home values $1M+. Does conventional offer higher loan limits? We would have 20% down. BK was discharged 10/2012.

ScottSchang
ScottSchang moderator

@hcornel1178 Ok, great, I'm a lender in CA.  Conventional will offer as high as $625,500, and we have a piggyback loan that will go up to the 80% loan to value.  I'm happy to shoot you over some numbers to review.  We would not be eligible until 10/2016, but we can at least run some numbers now to see what options are available?

There are also portfolio loans that will absolutely allow you to buy in this price range.  You're looking at a higher rate and fees than if can do the piggyback combo loan, but it's definitely a good option to get you into the home until you can refinance out of it.

Worse case scenario is that you have a little higher tax deduction for a few years while you have the higher rates.

Multiple options, it just comes down to whether or not it will accomplish your goals.

Shoot me an email to scott@findmywayhome.com if you would be interested in exploring this further?

hcornel1178
hcornel1178

If a foreclosure was included in a BK 7, does the waiting period of 7 years apply to jumbo loans or can we use the 4 year wait time?

ScottSchang
ScottSchang moderator

@hcornel1178 Jumbo financing typically will follow it's own guidelines, which is 7 years.  If you have the ability to use Conventional financing, or even a piggyback mortgage (1st and 2nd) to reach 90% loan to value, then you can use Conventional.

What State are you buying in?

lito3313
lito3313

Hi. Scott,

I don't know if you have seen a case like mine, but this is what I'm dealing with. In 2010 my ex wife stopped making pmts, and decided to to a loan modification, the bank started the foreclosure but stopped. In 2012 the HOA, initiated, and finished a foreclosure against us, they took title to the property, rent it out until 2014 when the Bank finished the foreclosure on the same property. So the situation is that FHA guidelines stipulates that the 3 years penalty start when the Borrower is removed from the title. This happens on 2012, so what the bank did in 2014, is a legal process to take the title back from the HOA. By the way the loan that foreclosed was conventional, so no Carvers.

The underwriter seems to think that FHA will consider the 2014 as the start of the 3 year period. And me and the loan officer disagree with her. What she does not know this is becoming a new trend by the HOA, to force bank to move faster, or pay them to get the title back. What do you think?

ScottSchang
ScottSchang moderator

@lito3313 I would agree with you and your loan officer.  The waiting period begins from the time that YOUR name is removed from title.  This is the date that you are no longer the owner of the property.  What the new owner (HOA) does with your home does not affect you or your timeline.

Your loan officer is going to have to fight for you on this one.  It is not uncommon for underwriters to want to interpret guidelines inaccurately in order to reduce perceived risk to the lender.

dhaas2833
dhaas2833

Hi Scott.  I am in the same boat as a lot of the other comments but need a little clarification.  I am 1 year out of chapter 13 but my investment property that was included in the bankruptcy still has not forelcosed.  It has been 7 years now and still we are on the title.  I am looking at getting a conventional loan next year but this foreclosure is still hanging over our heads.  Does it make sense to do a deed in lieu to expedite and does it make a difference. Will the lender count the waiting period in with the discharge date?


And do you know any lenders that are using this guideline?  A lot of banks have thier own overlays above the Fannie requiements...thanks

ScottSchang
ScottSchang moderator

@dhaas2833 You can absolutely do a deed in lieu and still use the 2 year waiting period from the discharge of the Chapter 13 (as long as mortgage was discharged).  It's not unusual for lenders to not know this guideline, because the actual underwriting guideline does not mention DIL or short sale, only foreclosure after BK.

I have done many of these loans in California, and I have a handful of lender friends around the Country that have been successful as well.

Shoot me an email to scott@findmywayhome.com, write a short description of your scenario, and what State you're buying in, and I will make an introduction to someone that can help.

Calgirl53
Calgirl53

Hi Scott I had a Chapter 7 bankruptcy that was discharged in 2010 my home was included we did not reaffirm it home was then foreclosed in December 2015 I would like 2 buy again and was wondering what the waiting period would be in the state of New Jersey I have rebuilt my credit to approximately 700. My credit report does not list the Foreclosure only the bankruptcy my foreclosure was under a conventional mortgage will I be able to get another or an FHA thank you for your help

dollard01
dollard01

hi scott,

i live in ca. and my ch7 bk was discharged back in feb, 15'. i didn't own any property or had anything of value auctioned off. since then i've bought another vehicle and have been slowly building up my credit score. i'd like to purchase a home soon, possibly under the 200k. price range. my question is how much longer should i wait before buying and what would be the steps to get started? also, i'm a little late to the game but what is considered a fair or median interest rate for folks like me.

ScottSchang
ScottSchang moderator

@dollard01 The waiting period for you to be able to buy a home using traditional financing is determined by the type of financing you're trying to apply for.  For conventional, fannie mae or freddie mac underwritten loans, the wait is 4 years from the discharge of the chapter 7.  FHA will be your shortest path to homeownership with only 24 month wait, putting you at February 2017.

The interest rates are not different from anyone else applying for a mortgage.  There are no specific penalties or fees associated with past credit challenges, only a waiting period.  You rate is primarily influenced by your down payment and credit score.

I am a lender in CA and can help.  I would recommend looking at your credit now, and looking for opportunities to raise your scores as much as you can while you wait out these last 6 months.

If you would like help preparing, shoot me an email to scott@findmywayhome.com and I'll see if I can point you in the right direction.

Bran_T
Bran_T

Hi. My husband and I filed chapter 7 bankruptcy and after several attempts, our mortgage company would not reaffirm. We have always paid on time and have never been late and are now in a "pay to stay" situation (and continue to pay on time). We bought our home 3 years ago and it  turned out to be in very bad condition and would like to move.    My question is this: after two years following our recent discharge can we walk away from our home and purchase a new home (FHA loan) or do we need to sell our current home first? Even though we would have been paying on the loan for 5 years, there would not be much equity as the home requires too much in major repairs to sell for top dollar....we would more than likely have to sell it as a short sale or foreclose.

ScottSchang
ScottSchang moderator

@Bran_T You can certainly purchase a new home using FHA if you can "afford" both payments.  If you cannot afford both payments, your options become limited.  If you do a short sale, deed in lieu of foreclosure, or "walk away" and let the bank foreclose, you have an additional 3 year wait from the date your name is removed from title.

If you stop making payments, your options are going to be very limited. 

Hope this helps?

Jatwood
Jatwood

Hi, I'm trying to clear up a question. My husband had a short sale that went on for very long and finally was foreclosed. It took several several months for the deed of trust to transfer out of his name. Do we have to wait 7 years to buy again from the date the deed transferred?

Thanks!

lpsiras
lpsiras

Hi there.  My husband and I have been paying into a Chapter 13 for almost 5 years, and will hopefully be wrapped up in December.


How long do we have to wait before we can apply for a purchase money mortgage?  We're looking to move out of state at some point next year, so I want to be sure that it's actually a possibility!


Thanks in advance!

ScottSchang
ScottSchang moderator

@lpsiras You would be eligible for FHA financing in 1 year from the discharge of the Chapter 13.  Conventional financing is 2 years from the discharge date.

Hope this helps?

Contact Us
we'll be in touch soon
Your message has been sent.
Oops! that doesn't seem right.
Your Info
Message
X
Create An Account
Please Register To View Details
Why register? When you register, you will have the ability to save your favorite properties, leave comments, and save searches to update you when new listings hit the market. Use our powerful search tool for free.
Invite Someone To Search With You
Don't worry, we hate spam as much as you and would never share your information or send you unsolicited email.
Close