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Waiting Periods for buying after bankruptcy foreclosure short sale deed in lieu

2019 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 meeting a minimum waiting period.

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

If you’re like most people that got caught up in the financial crisis in 2008, you were either directly affected, or know someone that was directly affected.

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

Often, a 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 apply 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.

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2019 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.

2019 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.

2019 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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2019 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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2019 Conventional (Freddie Mac) Guidelines

Bankruptcy (7,11,13) – 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)

  • Foreclosure – 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)
  • Foreclosure / Short Sale / DIL included in Bankruptcy – 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)
  • Short Sale / Deed in Lieu of Foreclosure –
  • 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)

Credit 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.

2019 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.

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.

“Buy Again” Questions Answered

If you are like most people that visit this website, you’ve got a mortgage problem or an unanswered question and you’re having trouble getting answers.

We are here to help you get the right answer, the first time, and connect you with an experienced loan officer that can help if necessary.

Asking Your Question is Easy

  • Email me Directly:  Simply click the email at the top of the site.  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 these comments and questions in real-time and every question is answered.

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.

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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

  • Pete says:

    Hi Scott,
    My wife and I filed chapter 7 bankruptcy in 2007 and our mortgage was included. We stayed in the home for about 4 years after continuing to pay on it. We were forced to let the house go at the end of 2011. The bank finally forclosed in May of 2016. My wife has since passed away and I am trying to buy a home now. We never reaffirmed the mortgage but I’m on lender number 3 and they are all hung up on that little box that says we intend to reaffirm and they are saying that it means the mortgage was not included in the bankruptcy. Can you help me understand this?

    • Scott Schang says:

      Hi Pete, yes, I can definitely help. I have loan officer friends around the Country that have a lot of experience with these guidelines. It’s shocking how many loan officers and underwriter do not know, understand, or choose to ignore these guidelines.

      Shoot me an email to scott@findmywayhome.com and I’ll introduce you to someone that is ok with the “intend to retain” box checked on the BK petition.

      Hope this helps?

  • Allen says:

    Hi Scott, We filed a Chapter 7 Bankruptcy and were discharged a little over 2 years ago. Our mortgage and second mortgage with our Credit Union were included in the bankruptcy. We are wanting to try to qualify for an FHA loan. We have about 8-10% down payment and FICO scores ranges are 679-707. Our question is about the waiting period for an FHA loan. Our credit reports show Chapter 7 bankruptcy, not foreclosure for the mortgage and second mortgage. Should we be able to qualify for an FHA loan now or will we still have to wait the 3 years since the mortgage was included?

    • Scott Schang says:

      Hi Allen, great question! It really just depends on what happened to the loans after the BK. Did you let the home foreclose? Are you still in it? Are both mortgages current? While the FHA waiting period for a BK is only 2 years, there is a 3 year wait from the date that your name is removed from title by way of foreclosure, short sale or deed in lieu of foreclosure.

      There are a few moving parts here…if you would like to contact me directly at scott@findmywayhome.com, I can walk you through all of the options. It will come down to what happened to the mortgages after the BK.

      Hope this helps?

  • Angela H says:

    Hello,
    I had a deed-in-lieu that was finalized in 2015 (80% of loan) and 2016 (remainder of loan). I was told by a bank (without going through actual pre-approval process) that I would have to wait 7 years before I could qualify for a loan. I thought it was 3 years (based on previous research and with your information stated above). Should I still try for pre-approval or just wait full 7 years?

    • Scott Schang says:

      Hi Angela, the waiting period following a deed in lieu of foreclosure is determined by the type of financing you’re using to buy the new home.

      FHA financing only requires a 3 year wait from the date your name came off title. Conventional financing is 4 years, unless the mortgage was included in a bankruptcy. If there was a bankruptcy, then using conventional financing, you could ignore the deed in lieu date, and the waiting period would be 4 years from the discharge.

      VA financing is only 2 years, and USDA is also 3 years if you’re buying in a USDA eligible area.

      If you would like an introduction to a loan officer that has experience and expertise with these guidelines, shoot me an email to scott@findmywayhome.com and let me know what State you’re in.

      Whoever you spoke to that told you 7 years is dead wrong. Foreclosure is 7 years, deed in lieu was never 7 years.

      Hope this helps?

  • Brandie M Asay says:

    I forgot to add that my bankruptcy was a Chapter 13

  • Brandie M Asay says:

    I included my home in my bankruptcy over 5 years ago. Unfortunately the foreclosure did not finalize until last year. Is there any way to qualify for a loan prior to the 3 year seasoning period? I was part of the 2008 housing market crisis and owed way to much on my home to keep it. I have pretty good credit, worked at my job over 18 years and do not have late payments on anything.

    • Scott Schang says:

      Hi Brandie, using a Conventional loan, you are eligible for financing now. The 3 year waiting period only applies to FHA. Now, unfortunately, many lenders do not know they can do this, or they will have a problem with the amount of time that passed between the bankruptcy and the foreclosure.

      The good news is that we have a lot of experience with these guidelines, and I can introduce you to someone that can help. There’s no cost here, I’m just a California mortgage broker with friends across the Country that have as much experience as I have on this subject. I trust them.

      If you would be interested in an introduction, shoot me an email to scott@findmywayhome.com and I’ll make the connection 🙂

      Hope this helps?

  • Liz from Florida says:

    So excited to have found this thread and hoping for some help. I had a bankruptcy in 2011 preceding divorce from an abusive ex-husband. My current husband had a Ch 7 BK discharge in Aug, 2017. The home we are in now was reaffirmed and we’ve been making payments. We will walk away with $85k and are planning to go FHA with 3.5% down, and are paying off all remaining debt from proceeds. We have a contract on a new build, conditional on financing. We just submitted our application with a closing date after the 2 year seasoning mark, but hoping for conditional pre approval so the builder can begin work. Do you know if this is possible? We’ve been told yes, we’ve been told the waiting period is 3 years, no one is consistent.

    Right now our DTI is 60% because a few things are not showing as paid off on our credit report, but we submitted our mortgage payoff with our contract to show that there will be substantial equity after the sale. We will be debt free and have approximately $40k left over in savings after we pay closing costs and down payment. I’d appreciate your feedback!

    • Liz from Florida says:

      I’d like to add that our scores are in the upper 600’s – he said 670/669 for us both.

    • Scott Schang says:

      Hi Liz, thank you for your question! For FHA, the waiting period is only 2 years from the discharge. If you had a foreclosure, short sale or deed in lieu, the wait is 3 years.

      As far as getting a conditional approval, an experienced loan officer can do this! You would not be able to run the automated underwriting system, so the loan officer would simply need to “credit qualify” you, based on your income, credit scores and debt.

      I have a loan officer friend in Florida that could do this. If you would like a second opinion, or an introduction, shoot me an email to scott@findmywayhome.com and I’ll connect you.

      Hope this helps?

  • Brian says:

    Hi there! My ex wife was awarded the home (loan in my name) in the divorce. The judge never even addressed her having to pay for it. After months of her living in the home for free I made the difficult decision to let the home go. I didn’t have any choice other than continue to pay indefinitely while she build the equity, or just stop paying it. Long story short she never made a single payment and the home eventually foreclosed.

    The deed transferred back to the mortgage in oct 2016. What are your thoughts as to when I would be able to qualify? Such a horrible position. The court forced me to ruin my credit. SHe got physical possession of the house and van yet the payment was never even addressed.

    • Scott Schang says:

      Hi Brian,

      It’s highly unusual that the mortgage was not addressed in the divorce decree. If there is not specific language that states that you your ex is 100% responsible for the mortgage (usually accompanied by a window within which the loan must be refinanced into the ex’s name).

      The waiting period after a foreclosure is 3 years for FHA financing, and 7 years for conventional financing, unless you filed bankruptcy prior to the foreclosure.

      Did you file bankruptcy prior to the foreclosure?

  • Marta says:

    Hi ! I have been discharged in oct ch. 7 however we started with ch 13 in July 2017. The house was included in the discharged. How long do we have to wait to apply for a loan?

    • Scott Schang says:

      Hi Marta,

      If you’ve started a Chapter 13, you will have a new waiting period from the discharge, or dismissal of the new bankruptcy. Are you still living in the home? If you are living in the home, is the mortgage current?

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