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short sale and deed in lieu waiting periods extended after 2014

Buy Again Sooner after Short Sale or Deed in Lieu of Foreclosure?

NOTE:  Short Sale and Deed in Lieu of Foreclosure guidelines were changed in August, 2014 – See new guidelines here


You can buy again sooner using Fannie Mae conventional home loan financing if you avoided foreclosure of a previous home through a short sale or deed in lieu of foreclosure.

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Buy Again After Short Sale / Deed in Lieu of Foreclosure

  • TWO (2) Years up to Maximum 80% Loan to Value | 20% Down Payment
  • FOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
  • SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

The good news is that it’s POSSIBLE

Possible doesn’t mean it’s going to be easy.  One of the conditions of being able to buy again sooner  is that the short sale or deed in lieu of foreclosure is properly reported on your credit report.

This is important because Fannie Mae uses an automated underwriting system called DU or Desktop Underwriter.  Because this is an automated underwriting system, it will import your credit report and make a decision based only on what information is reported.

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If items are reported in error, it could cause a false decision – on the other side, if items are excluded from your credit report (like the fact that foreclosure was avoided) this will also result in a false decision.

Also, it is not uncommon for investors like Fannie Mae to “allow” loans with exceptions or unusual conditions such as this, and many times they allow it with additional costs or restrictions to lenders, which means that sometimes these types of loans are not widely available and therefore it’s difficult to get information about them.

Do you have 10% to 20% down payment?

If you’ve worked hard to re-establish your credit and saved up enough money for a down payment, this should be great news!  I would like to think that I do a pretty good job of staying on top of changes in the industry, but honestly, this one slipped by me for a couple of months.

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If you think you may be eligible to buy again after short sale or deed in lieu of foreclosure and have a 10%-20% down payment, leave a comment below, drop me an email, phone call or chat live with a specialist here on the site.

Visit this article for more information about Buying Again after Bankruptcy, Short Sale or Foreclosure

About Your Expert

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

Leave a Question or Comment About this Topic

  • Jamie says:

    My husband and I would like to purchase the home we are renting. We are a year post deed in lieu. Are there any mortgages we can get that does not require a waiting period? If there is are some without a waiting period, would the deed in lieu still be a big issue in approval?

    • Scott Schang says:

      Hi Jamie, there are portfolio loans that do not require waiting periods, but they come at a slightly higher cost. Was the mortgage included in bankruptcy by any chance?

      Another question would be, are you related to the person that owns the home? When using a portfolio loan, typically a larger down payment of 20% or more is required (depending on your credit scores).

      So, the short answer to your question is “Yes”. The follow-up questions will determine whether or not it’s a “good” answer. If you can pull together the higher down payment, I think it’s smart to buy now, then refinance into a more permanent loan once you’ve met the waiting period guidelines.

      I can also introduce you to someone I know and trust that can give you a second opinion. If you would like an introduction, shoot me an email to scott@findmwywayhome.com and let me know what State you’re buying in!

      Hope this helps?

  • Donna Simpson says:

    Had hardships, I’m now disabled,and husband had to have heart surgery. This put us in very hard spot . Lived in our home for 19 years and lost it , did a DIL. we have saved money for 20% down on a low cost home to buy . Can we buy ? Who do we call for help to buy?

    • Scott Schang says:

      Hi Donna, I am very sorry to hear about your challenges, I cannot even imagine. You have several options available to you. The “waiting period” will depend on what type of loan program you are using. FHA will allow you to buy 3 years from the DIL. Conventional will allow you to use the BK waiting period of 4 years, and ignore the DIL. If you are not past any of those waiting periods, there are portfolio loans that carry a little higher interest rate, and will get you into the home until you meet the waiting period to refinance into terms. I will send you an email introduction for a friend of mine in PA that has experience with these guidelines.

      Hope this helps?

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