2022 When Can I Qualify for a Mortgage After Bankruptcy, Short Sale, Foreclosure or DIL

Qualifying for a mortgage after financial hardship is normally only a matter of meeting a minimum waiting period.

The waiting period is determined by the nature of the financial hardship and the type of mortgage you are applying for.

• Buy a Home after Bankruptcy
• Buy a Home after Foreclosure
• Buy a Home after Short Sale
• Buy a Home after Deed in Lieu of Foreclosure

If you’re like most people that got caught up in one of the many financial crises in our lifetime, you were either directly affected, or know someone that was directly affected.

Many homeowners found themselves in serious financial hardship resulting in bankruptcy, foreclosure, deed in lieu, or short sale.

Often, bankruptcy is followed by the default of a mortgage, and the loss of a home to foreclosure, short sale, or deed in lieu.

It can get tricky knowing which waiting period applies and how to figure out the shortest waiting period possible.

This is a very popular subject as you can see if you scroll to the bottom of this article and see over 2,200 questions and answers dating back to early 2011.

2022 FHA Guidelines

• FHA Bankruptcy Waiting Period – You may apply for an FHA-insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.  You may apply for an FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
• FHA Foreclosure Waiting Period – You may apply for an FHA-insured loan THREE (3) years after the sale/deed transfer date.
• FHA Short Sale / Deed in Lieu Waiting Period – You may apply for an FHA-insured loan THREE (3) years after the sale/deed transfer date. FHA treats short sales, deed in lieu, and foreclosure as the same waiting periods.

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

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

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2022 VA Guidelines

• VA Bankruptcy Ch 7 Waiting Period – You may apply for a VA guaranteed loan TWO (2) years after a chapter 7 Bankruptcy
• VA Bankruptcy Ch 13 Waiting Period – 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.
• VA Foreclosure / Deed in Lieu Waiting Period – You may apply for a VA guaranteed loan TWO (2) years after the sale/deed transfer date.
• VA Short Sale Waiting Period – 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

VA Credit Requirement 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.

2022 USDA Guidelines

• USDA Bankruptcy Waiting Period – You may apply for a USDA rural loan THREE (3) years after the discharge of Chapter 7 or 13 Bankruptcy
• USDA Foreclosure Waiting Period – You may apply for a USDA rural loan THREE (3) years after the sale/deed transfer date.
• USDA Short Sale / Deed in Lieu of Foreclosure Waiting Period – 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 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.

2022 Conventional (Fannie Mae) Guidelines

• Fannie Mae Conventional Bankruptcy Waiting Period – 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 Chapter 13
• Fannie Mae Conventional Foreclosure Waiting Period – You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
• Fannie Mae Conventional Foreclosure Waiting Period (includes 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
• Fannie Mae Conventional Short Sale / Deed in Lieu of Foreclosure Waiting Period – 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 the date your name is removed from the title.

Fannie Mae Conventional Credit REquirement:  Must be re-established with a minimum 620 credit score.

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2022 Conventional (Freddie Mac) Guidelines

Conventional Loan After Bankruptcy (Types 7,11, and 13) – You may apply for a Conventional, Freddie Mac loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, or as determined by Loan Products Advisor (AUS)

• Freddie Mac Conventional Foreclosure Waiting Period – You may apply for a Conventional, Freddie Mac loan SEVEN (7) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)
• Freddie Mac Conventional Foreclosure / Short Sale / DIL included in Bankruptcy Waiting Period – You may apply for a Conventional, Freddie Mac loan after a minimum FOUR (4) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)
• Freddie Mac Short Sale / Deed in Lieu of Foreclosure Waiting Period –
• You may apply for a Conventional, Freddie Mac loan FOUR (4) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)

Freddie Mac Credit Requirement:  Must be re-established with a minimum 620 credit score.

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.

2022 Jumbo Mortgage Guidelines

• Jumbo Mortgage Bankruptcy Waiting Period – 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 bankruptcies occur on your credit profile.
• Jumbo Mortgage Foreclosure Waiting Period – You may apply for a Jumbo mortgage loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
• Jumbo Mortgage Short Sale / Deed in Lieu of Foreclosure Waiting Period – 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 requirements.  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 offers 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 your lender for details.

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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.

NOTE:  This page was first created in February 2011, and is updated as new guidelines are released.

This page is monitored by experts that understand the guidelines, and have successfully guided countless families back into homeownership after significant financial hardship.