2017 Buy Again After Bankruptcy, Short Sale, Foreclosure or DIL

by on 1.6.16 in Boomerang Buyers

Updated April 3rd, 2017

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.

2017 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/deed transfer date. FHA treats short sale, deed in lieu and foreclosure as the same waiting periods.

Credit must be re-established no late payments in past 12-24 months, depending on hardship

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

2017 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 the sale/deed transfer date.
  • 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

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

2017 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 the sale/deed transfer date.
  • 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 31 of 34

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

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2017 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,
  • Foreclosure / Short Sale / DIL included in Bankruptcy – You may apply for a Conventional, Fannie Mae loan after a minimum FOUR (4) years from the DISCHARGE of a Chapter 7 Bankruptcy, TWO (2) years from the DISCHARGE of a Chapter 13 Bankruptcy
  • Short Sale / Deed in Lieu of Foreclosure – UPDATED – Effective 7/29/2014:  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.

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

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2017 Conventional (Freddie Mac) Guidelines – Updated 4/3/17

Bankruptcy (7,11,13) – You may apply for a Conventional, Freddie Mac loan after your Chapter 7 bankruptcy has been discharged for TWO (2) years, or as determined by Loan Products Advisor (AUS)

  • Foreclosure – You may apply for a Conventional, Freddie Mac loan THREE (3) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)
  • Foreclosure / Short Sale / DIL included in Bankruptcy – You may apply for a Conventional, Freddie Mac loan after a minimum THREE (3) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)
  • Short Sale / Deed in Lieu of Foreclosure –
  • You may apply for a Conventional, Freddie Mac loan TWO (2) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)

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

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Fannie Mae and Freddie Mac have reduced waiting periods in cases of extenuating circumstances

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

NOTE:  I do not yet have a success story for someone qualifying for the reduced time frames that Freddie Mac proposes to offer.  That shouldn’t stop you from trying.

2017 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.

Find the Right Lender. Find the Right Loan. CLICK HERE FOR HELP!

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.

How Do I Get My Questions Answered?

All lenders are not created equal.  Most of the readers that find this site because they’ve been researching solutions to challenges, and have been told 10 different things by 10 different loan officers.

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We’ve created this resource to help you sift through the endless opinions and articles that may, or may not directly answer your question correctly.

There are several ways to ask questions, and get expert opinions on this website.

  • Submit a Question:  On the bottom of this page, you’ll see a prompt that allows you to ask questions.  These questions come directly to me, and are answered very quickly.
  • Leave a Comment:  Below every article is the option to leave a comment or question.  We see this comments and questions in real time and the always answered, usually pretty quickly.

In addition to researching your questions and providing you with expert advice, I may be able to introduce you to a lender friend that I know has experience with your specific situation and can help.

2,194 Comments
  1. 2yrs out of Chapter 7 but DIL which was in bankruptcy, and I am being told I have to wait 3yrs from title transfer instead of the discharge date of bankruptcy in FL. Can you give me some info if any way around this? I have 650 score and 25yrs on job.

    comment by Harry
    on 6.21.17 at 2.01 pm
    1. Hi Harry,

      FHA is going to require a 3 year wait from the date your name is removed from title, that is accurate. The next shortest waiting period is Conventional financing will allow 4 years from the BK discharge, and you can ignore the DIL date.

      There are options, but you would be looking a minimum of 15% to 20% downpayment, and the rates and closing costs are going to be higher than a traditional loan.

      Here’s more information on Portfolio loans – https://www.findmywayhome.com/home-mortgage-news/specialty-loans/more-options-with-portfolio-mortgage-loans/

      I actually think it makes a lot of sense in many cases.

      if you think it might be an option, I have a lender friend that has experience with these loans and can help. Are you buying in FL?

      comment by Scott Schang
      on 6.21.17 at 5.32 pm
  2. Scott, We did a short sale on our property in July 2012. We were able to purchase a new home 20 2016 and are very happy now.Will we be able to apply for a equity loan due to our short sale in 2012

    comment by Porfirio F
    on 6.19.17 at 2.07 pm
    1. Hi Porfirio,

      Home Equity Lines of Credit (HELOC) is normally offered through a depository bank or credit union. Because the nature of these institutions is that they are more conservative, and the fact that it’s a second lien position, it may be challenging finding a “stand alone” HELOC that will allow a short sale 5 years ago.

      That said, I know of several lenders that will allow a HELOC / second mortgage behind a conventional first mortgage if you’re doing them both at the same time. You should also be able to do a cash out refinance of your current mortgage to take out the equity you need.

      I am in California. If you’re not in California, I can introduce you to a lender friend of mine that might be able to offer a second opinion, or may have access to these programs? If you would like, shoot me an email to [email protected] and let me know what State you’re in.

      I will see if I can get you pointed in the right direction! Hope this helps?

      comment by Scott Schang
      on 6.19.17 at 2.15 pm
  3. Scott, We did a short sale on our property in July 2012. We were able to purchase a new home and are very happy now. We able to purchase a new home. Will we be able to apply for a equity loan due to our short sale in 2012

    comment by Porfirio F
    on 6.19.17 at 2.06 pm
  4. We are over a year out from bankruptcy and 6 months out from my husbands foreclosure. Both of these occurred because of something out of our control. After much research regarding USDA loans, why is it so hard to find a lender that is willing to look at our situation and consider “extenuating circumstances” instead of just throwing us to the curb? Are there any companies that will actually help a potential customer utilize the USDA mortgage loan as it was intended for? To help a family get into a safe home? USDA has guidelines about “indicators of unacceptable credit” and they mention, under chapter 10 Credit Analysis, that there are different methods to get an individual approved for a USDA loan. So, why is it so difficult to find a lender that will follow the guidelines of USDA and not just use their own rigid guidelines? If a company is going to be a part of the USDA Mortgage list, then why not actually be for the people and help those who wouldn’t otherwise qualify for a loan, get a loan?
    Thank you for your help!

    comment by Kealana Rede
    on 6.19.17 at 11.04 am
    1. Hi Kealana,

      I understand your frustration. Qualifying for an extenuating circumstances exception is extremely difficult to get. I’m not sure what your situation is, or who’ve you’ve spoken to about your situation, so it’s a little difficult for me to share my opinion.

      If you would like, shoot me an email to [email protected] with more detail about what your extenuating circumstance is, and let me see if I can find someone that I can introduce you that has had success with getting these exceptions.

      Please also include the State you’re buying in.

      Hope this helps?

      comment by Scott Schang
      on 6.19.17 at 12.27 pm
  5. I was discharged my chapter 7 three years ago before I got married. It took 2 1/2 years to foreclose on my property. I am now married my wife has a 740 credit score, and I have a 715 cany chance on be buying a house in the next year?

    comment by Todd Miaer
    on 6.18.17 at 8.51 am
    1. Hi Todd,

      Conventional financing will allow you to use the BK waiting period, and ignore the foreclosure date. The waiting period is 4 years from the bankruptcy discharge for conventional financing. FHA will allow you to buy in 2 years from the chapter 7 discharge, but will require an additional 3 years from the foreclosure.

      So, you’re about 12 months out (4 years from BK) for traditional financing.

      There is another option if you want/need to buy sooner. You can look at a portfolio loan if you have 15% to 20% down payment. A portfolio loan is going to have higher interest rates and closing costs, but it will get you into the home until you can refinance into conventional at your 4 year mark.

      If you would like an introduction to loan officer that is familiar with all of these guidelines, feel free to drop me an email to [email protected]. Let me know what State you’re buying in, and . I can make that connection for you!

      Hope this helps?

      comment by Scott Schang
      on 6.18.17 at 11.59 am
  6. I lost my secondary home to foreclosure due to back taxes. I owned the home and it had no liens but the foreclosure shows up on a drive report. It did not affect my credit. It has been nearly 3 years since the transfer was recorded. Can I get a usda loan prior to the three years?

    comment by Hugh
    on 6.15.17 at 6.36 pm
    1. Hi Hugh,

      That is a great question, I have not run into this scenario before. If there is a foreclosure in public records, I think that would prevent you being able to use USDA until after the 3 year mark. The guidelines do not specify what caused a foreclosure, only that if a foreclosure occurs, the waiting periods must be met before being eligible to buy again.

      I do not have any personal experience with this scenario, so please feel free to get a second opinion!

      Hope this helps?

      comment by Scott Schang
      on 6.16.17 at 12.23 am
  7. Sorry. I’m confused bold red lettering on this website dating 4/3/17

    Whats the waiting period for a conventional loan after a short sale. 2 3 0r 4 years. Sorry. One lender told me 4 years. Thanks

    comment by BRUCE LEBOEUF
    on 6.15.17 at 12.46 pm
    1. Hi Bruce,

      Freddie Mac states that they will allow less than 4 years if you can get an automated underwriting approval. I personally have not been able to get an automated underwriting approval in situations where I would have thought I would.

      4 years is the standard waiting period.

      comment by Scott Schang
      on 6.15.17 at 12.51 pm
  8. I’m being told after I already locked my rate and paid for an appraisal that I can not refinance my FHA loan into a conventional Freddie Mac loan even though I had a short sale happened well over 3 years ago. Is this correct? I just wanted to refinance my loan into a conventional loan. They say I can’t refinance out of my FHA Loan into a conventional, they say something in the small print.

    comment by Ted
    on 6.14.17 at 8.21 am
    1. Hi Ted,

      I am so sorry to hear this, your loan officer never should have let you pay for an appraisal. There is no small print, it’s a standard guideline that you would not be eligible for conventional financing until 4 years from a short sale.

      If the short sale was included in a bankruptcy, that might shorten your waiting period.

      Unfortunately, your loan officer made a mistake. You should probably try to get them to refund the cost of the appraisal for you.

      On another note, if your FHA rate is higher than 4% now, I would seriously consider doing a FHA streamline to drop the rate to 3.5% now, then you can look at a conventional loan that will remove your mortgage insurance as soon as your short sale is seasoned.

      The shame is, there is no appraisal required with a FHA streamline. Either way, I would use a different lender…for 2 reasons. First is the obvious reason that this lender is not experienced. The second is that the market made a serious move today and interest rates will be better than when you locked.

      If you would like a second opinion, or would like to explore any of these options, shoot me an email to [email protected] and I can introduce you to a lender friend of mine that has experience with these guidelines.

      Hope this helps?

      comment by Scott Schang
      on 6.14.17 at 10.46 am
      1. Thank you. Streamline is not an option for me. I was trying to refinance my 30 FHA loan into a conventional 15 year loan. Every thing was going fine until this came up which wells fargo should have disclosed to me from the being. I told them it was a FHA loan. I am 4 moths from the 4 year mark. Hope I get a miracle rate drop at that time.

        comment by Ted
        on 6.14.17 at 9.03 pm
        1. I don’t think you have to worry about rates too much. It’s impossible to know for sure, but I think you’ll be fine as far as rates go.

          comment by Scott Schang
          on 6.15.17 at 10.42 am
  9. We are applying for a mortgage loan after 6 years from our Deed in Lieu of Foreclosure. We have below a 60% LTV. We were told that an FHA loan requires PMI insurance for the first 11 years. Is that correct?

    comment by Heidi
    on 6.13.17 at 9.37 pm
    1. Hi Heidi,

      With a 60% LTV and 6 years from a deed in lieu, why are you using FHA? The conventional waiting period is only 4 years.

      Also, FHA mortgage insurance is permanent (life of loan) if you are getting a 30 year fixed. It’s 11 years if you are getting a 15 year fixed loan.

      It sounds to me like your lender may not have experience with these guidelines. If you would like an introduction to someone that does have experience with these guidelines, shoot me an email to [email protected] and I can make that connection for you.

      Hope this helps?

      comment by Scott Schang
      on 6.14.17 at 10.49 am
  10. Disappointed to find out my hardship fire is not included toward why I filed bankruptcy and cannot get a home lian

    comment by Rebecca
    on 6.13.17 at 3.44 pm
    1. Hi Rebecca,

      It sounds like you are referring to an extenuating circumstances exception as a means to lower your waiting period? The burden of proof for filing bankruptcy is much lower than the documentation and reasons for granting an exception for shorter waiting periods.

      comment by Scott Schang
      on 6.13.17 at 3.53 pm
  11. Hello,

    i live in Nc i got divorced and forclosure in 2008. i am a year and half discharged from my banckruptcy. my credit score sits with 710. i have recently remarried and my husband is two years+ out of bankruptcy,but he didnt claim his house on his he continued to pay on time,his credit score sits about 780. we want to purchase a home together. should we wait my full two years to apply?

    comment by kersha
    on 6.11.17 at 9.04 pm
    1. Hi Kersha,
      This gets tricky because 2 years after Bankruptcy is a FHA guideline. It will depend on what you plan to do with the current home. As long as you stay current, and can sell the home for what you owe on it, you could use FHA in 2 years from the discharge date.

      If you do not wish to sell the current home, the new home would need to be a minimum 100 miles from your current home.

      You would have to wait for your bankruptcy to be 2 years if your income is needed to qualify for the mortgage on the new home. Otherwise, if your husbands income is enough to buy, you are eligible now.

      This sounds like it could be more complicated. If you would like to email me directly, you can reach me at [email protected]. If you would like an introduction to a lender friend of mine that has experience with these guidelines, I may be able to do that as well.

      Hope this helps?

      comment by Scott Schang
      on 6.11.17 at 9.11 pm
  12. Short sale on vacation rental on 12/19/14 and now want to buy second home. Purchase price will be $380K and could put 20% down. Credit scores over 700. Can we purchase this home now? If so, could you recommend a lender?

    comment by Bruce Rilee
    on 6.11.17 at 2.53 am
    1. Hi Bruce,

      To use Conventional financing to purchase your second home, it requires a 4 year waiting period from the date your name is removed from title.

      There are portfolio loans available that, with 20% down and a 700 FICO would have higher rates and fees than a conventional loan, but I think the math works.

      Since you only need a portfolio loan until 12/19/18, it might make sense to explore.

      I can introduce you to someone that has experience with these programs and can help you explore this option. Shoot me an email to [email protected] and let me know what State you’re buying in.

      Hope this helps?

      comment by Scott Schang
      on 6.11.17 at 9.55 am
  13. Chapter 13 was discharged in 2015. We surrendered the house in a he chapter 13 too. May 2017 the foreclosure process started and we redeemed the house by selling it on the market after the sheriff sale. Our credit is good, the bank has never reported anything, so the only blemish right now is the chapter 13. My question is can we qualify for a loan right now? It has been over 2 years since discharge. But we now have a redeemed foreclosure.

    comment by Jason
    on 6.10.17 at 6.04 pm
    1. comment by Scott Schang
      on 6.10.17 at 9.41 pm
  14. We purchased our home in 2003. Over the years,we refinanced and such. In 2010 we were forced into bankruptcy. We never reaffirmed the debt. Fast forward almost 7 years later my job has taken me to a new city. However, the family is not able to move down right away due to other obligations. I have since decided to build. Everything is good except for the current home. It is not ready to sell and the family can not move until the new house is ready. The new mortgage company is,still trying to figure out what to do since we did not reaffirm the debt. What are our options?
    I should add that because of the market we currently owe more than the house is worth. Even when we sell we will take a loss

    comment by Rob
    on 6.9.17 at 7.13 pm
    1. Hi Rob,

      As long as the payments are current on your home, you should be eligible. I don’t have a lot of experience with construction loans, as they are not very common in Southern California where I live.

      I have many lender friends around the Country that have experience with the guidelines for borrowing after a bankruptcy. There should be no reason why you cannot qualify for a new loan. The lender simply needs to order a 12 month payment history (called a verification of mortgage) to document that you have continued to make your payments on time.

      If you have not been making payments on your current home, you would not be eligible until your name is off title of that home.

      If you would like to speak to someone familiar with these guidelines, shoot me an email to [email protected] and let me know what State you’re buying in.

      Hope this helps?

      comment by Scott Schang
      on 6.9.17 at 9.26 pm
  15. I got a divorce. I lived with my ex wife in her condo she had a primary mortgage. We did have a heloc llater in the marriage. I filed a chapter 7 after my divorce and it was discharged in October 2015. Is the two year waiting period from the discharge date? I am told since my ex wife who just recently went through a bankruptcy still hasn’t forclosed on the condo my waiting period hasn’t started? Which is correct?

    comment by Scott
    on 6.7.17 at 10.16 am
    1. Hi Scott,

      If you are no longer on title to the condo, your waiting period would be from the discharge of your bankruptcy. If you are still on title, and one or more of the mortgages are in default, then there may be an additional timeline from the foreclosure date, depending on what type of financing you are applying for.

      If you are on title, and if the mortgages are in default, there would be a 3 year wait from a short sale, deed in lieu or foreclosure for FHA financing, or a 4 year wait from the discharge of the bankruptcy as long as your name is removed from title.

      Does this make sense?

      comment by Scott Schang
      on 6.7.17 at 1.49 pm
      1. I was only on the HELOC. So is that considered a title? Either way I forfeited that debt in the chapter 7. So it should be from discharge date?

        comment by Scott
        on 6.7.17 at 5.27 pm
        1. Being on the loan is not what will determine the timeline as much as whether or not you’re on title to the home. Did you quit claim off title as part of the divorce? If you are still on title, you would be unable to do anything if the HELOC is not current.

          If you would like, you can shoot me an email directly to [email protected] and we can figure this out. I know it’s confusing.

          comment by Scott Schang
          on 6.7.17 at 10.44 pm
  16. Hello Scott, Thanks so much for this very informative article and for keeping it updated.
    My husband and I completed a DIL that was transferred into the bank’s name in May of 2015. It was not part of a bankruptcy. We’ve been renting since then and we really want to purchase a home. We’re looking into every option we can think of – even manufactured housing, but we’re getting a lot of different answers from different people regarding our ability to purchase whether it’s a manufactured or stick-built home. We’ve been pretty actively, but unofficially, pursuing this for a few months now and all my research has left me confused.
    So, at this point – assuming decent credit of at least 640, but with no real down payment, would you recommend that we just wait for another year and try for FHA or USDA? Or is there anything at all we could qualify for right now? And, if we wait, could we qualify for any conventional loans without a 20% down payment?
    And, can you offer any advice regarding manufactured housing? I realize it depreciates, but our intent is not to sell in the future – we just want a smaller home to grow old in.
    Obviously, I realize you can’t give me a comprehensive answer without really knowing and understanding our unique circumstances, but I’m hoping maybe you could give some general advice. It would be very much appreciated.
    Perri

    comment by Perri
    on 6.7.17 at 7.45 am
    1. Hi Perri,

      Manufactured housing is difficult because it’s not considered “traditional” financing. When financing is available, it usually requires a larger down payment and higher credit scores. I would suggest that if you’re interested in moving in that direction, ask the seller of the home about if it’s ever been financed. I know that Wells Fargo used to have financing programs for manufactured housing…that might be another place to start.

      As far as buying a single family home with traditional financing, FHA and USDA are going to be available at 3 years from the Deed in Lieu, Conventional is going to be 4 years.

      You can use conventional financing with as little as 3% down with income limits, or 5% down under any other circumstances.

      If you are eligible for VA housing benefits (Military), the wait is only 2 years.

      Hope this helps?

      comment by Scott Schang
      on 6.7.17 at 10.27 am
  17. We had a chapter 7 in August 2013 we are shy of 3 months to get a conventional loan we are in a time frame because we are renters buying a house that we live in and the seller is only giving us 60 days when are lease is up so we had to go to a FHA loan we have 20% down payment thou and we were told we can refinance later to get the PMI taken off when we refinance to a conventional loan, is there anyways for us to eliminate the PMI loan since we are so close to the 4 year mark and we have great credit too

    comment by julie
    on 6.7.17 at 5.48 am
    1. Hi Julie,

      Your timing is so close, it seems like you should be able to negotiate with the seller to give you time to close after the 4 year mark.

      The 1.75% upfront mortgage insurance premium is going to be about the same as the fees on a hard money loan. It’s a close call. I guess it just comes down to the math, and the resourcefulness of your lender.

      I’ve had this type of situation before, and when I called the seller as the lender, and explained to them the reason for the timing, they were pretty open to working with us.

      Are you working with a lender yet? If not, shoot me an email to [email protected] and let me know what State you’re buying in. I have a handful of very resourceful and experienced lender friends around the Country. I might be able to hep point you in the right direction.

      Hope this helps?

      comment by Scott Schang
      on 6.7.17 at 10.34 am
  18. Trying to purchase a new home. Filed Chatper 13 in 2009 it was dimissed/converted to Chatper 7 in July 2011 and discharged in October 2011, I surrendered my home in the BK. The home has not been foreclosed, I do not live in the home, the loan has been sold 4 times.
    I got approved in January for a conventional mortgage, two weeks ago they said the AUS for fannie mae is giving me a refer with caution. Nobody will manually underwrite the loan.
    My situation is this – DTI = 3% ( no debt ), credit 703, have down payment in hand ( house I am trying to buy is $458,000 and I am putting $40,000 down payment) and make over $15,000 a month. I meet every guidline I can find. The only thing I can think of is because my name is still on the deed that is why I am not getting approved.
    I have called fannie mae and so has my lender, none of them can figure it out, they all say there is no reason that I do not get an approved/eligible from AUS.
    What are my options if any? need help fast my house is ready to move in, I am ready to move in.

    comment by Zack
    on 6.6.17 at 7.48 pm
    1. Hi Zack,

      Yes, you’re exactly right, it’s because you still own that home. Have you attempted to do a deed in lieu or short sale on the home?

      What State are you trying to buy in? I have a couple of lender friends that have had success getting approved for conventional financing while still being on title of a home that you do not live in.

      I’m surprised you could not get an approve/eligible though. You’re not going to find any lender that will do a manual underwrite on a conventional loan, that pretty much doesn’t exist from my experience.

      Honestly, your best bet it to try to short sale or do a deed in lieu on that home. That would solve all of your problems.

      If you would like, shoot me an email to [email protected] and I’ll see if I can get you pointed in the right direction.

      Hope this hopes?

      comment by Scott Schang
      on 6.6.17 at 8.42 pm
  19. I’m so glad I found your website! My husband and I had a short sale two years ago on a rental property. Our primary residence has no mortgage. We would like to apply for a home equity loan against this house and make it a rental and purchase another home to live in where we will be able to put down more than 20%. Our FICO scores are in the low 700s, our debt to income ratio is 18% and our income range is $150-160k. Do we have a chance to obtain a home equity and a conventional loan?

    comment by Diane
    on 6.6.17 at 2.02 pm
    1. Hi Diane,

      I can definitely help. There are a few problems with your scenario here. First, most HELOC lenders are going to require a minimum of 4 years from the short sale. Second, a HELOC is only available on an owner occupied property. I actually just went through this with another reader. I was sure that we could get a HELOC on an investment property….I was wrong. That said, you have several options.

      With FHA financing, you would be eligible in 3 years from the short sale. FHA financing is only for owner occupied financing, so if you’re going to rent it out right away, that’s probably not a great option.

      With conventional financing, you could refinance as non-owner occupied to take the cash out, then use a conventional loan for the purchase of the new home. This is the absolute best way to do this…but it’s 2 years out.

      The “Now” option is to use portfolio loans to take cash out of your home, and buy the new one. At the loan to value that you’re looking at , and your credit score, this should not be such a bad option. The rates and fees are higher, but when you weigh that against doing nothing, I think the math would make sense.

      The good news is, you only have to keep to keep the portfolio loan until you’re eligible for a conventional loan in 2 years.

      If you want to shoot me an email to [email protected], let me know what State you’re buying in, and I can introduce you to someone that can help run some numbers so you know what your options look like on paper.

      Hope this helps?

      comment by Scott Schang
      on 6.6.17 at 6.28 pm
  20. I’m looking for the best option for a purchase loan given the following circumstances. Also, is a construction loan a possibility as well?

    Situation:
    -2 years after short sale (with delinquency)
    -current credit score 680+
    -Income of 200k+
    -10% or 20% down is fine

    comment by Tim
    on 6.6.17 at 10.44 am
    1. Hi Tim,

      I personally have not had any experience with construction loans that would allow this specific scenario. FHA is going to require a 3 year wait from the short sale, conventional if 4 years. If the mortgage was included in a bankruptcy, the conventional waiting period might be shortened. The delinquency prior to the short sale is irrelevant.

      You could most certainly qualify for a portfolio loan with between 15% and 20% down with only 2 years after a short sale. Perhaps it’s a stepping stone before you meet the waiting period for building your own home.

      If you have not spoken to anyone about this option, I might be able to point you in the right direction.

      Shoot me an email to [email protected] and let me know what State you’re trying to buy in. I will see if I have any contacts that I can introduce you to.

      Hope this helps?

      comment by Scott Schang
      on 6.6.17 at 11.02 am
  21. We are looking to buy after a chapter 7 BK/Foreclosure. We have met the waiting period for our BK, but was told that although the mortgage debt was listed in the Chapter 7 that the property was not “surrendered” and that means they have to go off the foreclosure date. Is this correct?

    comment by Essie
    on 6.5.17 at 9.16 pm
    1. Hi Essie,

      That depends completely on the type of financing you’re applying for. If you are applying for a FHA loan, then yes, you have a 3 year wait from the date your name was removed from title if it was by short sale, deed in lieu or foreclosure.

      Conventional financing will allow you to buy in 4 years from the discharge date, and ignore the foreclosure date. You do not have to “surrender” the property in the bankruptcy, and even if you did, it would not impact these timelines at all.

      When was your bankruptcy discharged?

      comment by Scott Schang
      on 6.5.17 at 10.17 pm
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