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When does my waiting period start?

When Does My Waiting Period Start?

When Can I Buy Again?

Trying to figure out the waiting period after Bankruptcy? Foreclosure? Short Sale? Deed in Lieu of Foreclosure?

I have been helping homebuyers after financial hardship since February 2011, and as a result, I have become one of the foremost experts on the underwriting guidelines and waiting periods surrounding this topic.

I’ve answered more than 3,000 comments on this site from folks all over the United States trying to figure out when they are able to buy again after a financial hardship, and this is one of the most common questions I get.

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There is a lot of confusion out there when it comes to the waiting periods required after a bankruptcy, or the loss of a home in the past.  Most of this confusion comes from lenders that understand some of the guidelines, but not all of the guidelines.

The number of phone calls and emails I get from homebuyers that were pre-approved, and got all the way through the process until the very end before being turned down is staggering!

It’s heart breaking talking to so many people that have spent money on appraisals and home inspections, only to be told a week before closing that the loan cannot be done.

My hope is that you’re one of the folks finding this before you start shopping for homes after a financial hardship, and not because your current lender is dropping the ball, or will not return your calls because they are embarrassed that they misled you about their experience and expertise.

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If you are one of those folks that are up against a deadline and your lender is back peddling, I can at least provide you with accurate answers so you know exactly where you stand.

Which Date Do I Use?

There can potentially be a lot of moving parts when it comes to navigating through a financial hardship.  Often, there are multiple challenges that may include a bankruptcy, and possibly the loss of real estate through foreclosure, short sale or deed in lieu of foreclosure.

The order that these challenges unveil themselves will also affect the timelines and dates you need to keep track of in order to determine the soonest date that you would be eligible for a new home loan.

Which date you use, and how long the waiting periods are will be determined mostly by what the financial hardship is, the timing of the events that follow the hardship, and the type of financing you are now applying for.

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Conventional Waiting Period

Also known as Conventional financing, both Fannie Mae and Freddie Mac underwritten loans use the same timelines and dates when determining when you’re eligible for home financing again.

Bankruptcy – You are eligible for conventional financing in 4  years from the discharge of a Chapter 7 Bankruptcy, 2 years from the discharge of a Chapter 13 bankruptcy.

If there was no mortgage included in the BK, or if you continued to make on-time payments on all mortgages discharged through the bankruptcy, you will use the discharge date as on your discharge papers your starting point for the waiting period.

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Foreclosure – A foreclosure that occurs on a mortgage that was included, and discharged in a bankruptcy will use the Bankruptcy discharge date for the eligibility timeline.

If the foreclosure occurs outside of the bankruptcy (prior to filing the bankruptcy), or if the mortgage  was not included in a bankruptcy, the waiting period is 7 years from the date that title transfers into the new owner’s name (recorded).

Short Sale or Deed in Lieu of Foreclosure – Considered “pre-foreclosure” hardships, a short sale or deed in lieu that occurs on a mortgage that was included, and discharged in a bankruptcy will use the bankruptcy discharge date as the waiting period.

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If the short sale or deed in lieu occurs prior to the bankruptcy discharge date, or if the mortgage is not included in the bankruptcy, the waiting period is 4 years from the date that title transfers into the new owner’s name (recorded).

Multiple properties – If you have multiple properties that were lost through foreclosure, short sale, or deed in lieu, you are going to use the date of the last (most recent) hardship as your waiting period.  The exception to this rule is if the mortgage was included, and discharged through a bankruptcy.

FHA Waiting Period

FHA insured loans typically have shorter waiting periods than Conventional in most cases.

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Bankruptcy – You are eligible for a FHA insured home loan 2  years from the discharge of a Chapter 7 Bankruptcy, 1 year from the discharge of a Chapter 13 bankruptcy.  If there was no mortgage included in the BK, or if you continued to make on-time payments on all mortgages discharged through the bankruptcy, you will use the discharge date as on your discharge papers your starting point for the waiting period.

Foreclosure, Short Sale or Deed in Lieu – Unlike Conventional financing, FHA treats foreclosure, deed in lieu, and short sale as separate events from a bankruptcy which carry an independent 3 year waiting period from the date that title transfers into the new owner’s name (recorded).

If the mortgage on the home was a FHA insured loan, the waiting period begins on the day that the mortgage insurance claim is paid.  The government reporting system that determines eligibility is call CAIVRS.  If you show up on a CAIVRS report, you are not eligible for FHA financing yet.

Multiple properties and events – If you have multiple properties that were lost through foreclosure, short sale, or deed in lieu, you are going to use the date of the last (most recent) hardship as your waiting period.

VA Waiting Period

VA guaranteed loans tend to be the most flexible, and most aggressive in terms of waiting periods.  VA will always look at the “big picture” and evaluate the level of risk, and the circumstances surrounding the hardship.  VA qualifying guidelines tend to try to always fall on the side of benefiting the Veteran.

Bankruptcy – You are eligible for a VA guaranteed home loan 2  years from the discharge of a Chapter 7 Bankruptcy, and as early as 1 year from the filing of a Chapter 13 bankruptcy with 12 months of on-time payments and permission from the Bankruptcy court.

If there was no mortgage included in the BK, or if you continued to make on-time payments on all mortgages discharged through the bankruptcy, you will use the discharge date as on your discharge papers your starting point for the waiting period.

Foreclosure or Deed in Lieu – VA suggests that 24 months pass before a Veteran will be eligible to buy after a foreclosure or deed in lieu of foreclosure.  Similar to FHA insured financing, VA recognizes bankruptcy, and any subsequent loss of the home as two separate events with separate waiting periods.

Multiple properties and events – If you have multiple properties that were lost through foreclosure, short sale, or deed in lieu, you are going to use the date of the last (most recent) hardship as your waiting period.

Still Confused About Which Date to Use?

There is no black and white path to understanding these guidelines.  The biggest challenge that most lenders have is that they have very limited knowledge or experience of these guidelines, so they quote waiting periods from one program, and imply that this is a standardized waiting period regardless of what type of loan you’re using to buy again.

This is where 99% of all bad advice comes from, inexperienced loan officers quoting inaccurate guidelines.

Have a situation that you think is unique or extra complicated?  Leave your comments, questions or scenarios below in the comment thread, and I will help you sort out the truth.

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

  • PaulS says:

    Had a bankruptcy in 2009 and it was listed in the bankruptcy. At the end of purchasing a vacation home we were told that because it was a Freddie Mac loan and the bank did not sell the foreclosed property until 2017, we did not qualify for the loan (Conventional) because my name has not been off the title for 3 years. This makes absolutely no sense to me! What if the bank never sells it, I can never buy another house? Now they’re switch us to a Fanny Mae because they go by discharge date. They also said that the mortgage had to be listed in the bankruptcy.

    • Scott Schang says:

      Your spidey senses are correct, this doesn’t make sense. First off, the foreclosure waiting period for Conventional financing is 7 years, UNLESS the mortgage was discharged in a bankruptcy.

      When your mortgage is included in BK, you are eligible using the BK waiting period of 4 years from discharge, and you can ignore the foreclosure waiting period.

      A 3 year waiting period after a foreclosure is an FHA guideline, not Conventional.

      If you would like, I can introduce you to someone that I know and trust and have extensive experience with these guidelines. Shoot me an email to scott@findmywayhome.com and let me know what State you’re in, and I’ll get you connected to someone with more experience for a second opinion.

      Hope this helps?

  • ]mpyp home of 25 years fast been for closed due to a serious health issue. I am trying to find out what date to go by to try and purchase another home. I get different answers from.everyone I talk to and everything I read. I had a usda loan. Any help would sure help clear up my confusion. Thank u so much.

    • Scott Schang says:

      Hi Sharon,

      I’m very sorry to hear about your health issue and the foreclosure. I’m sure that was a difficult time. The waiting period will depend on what kind of financing you’re applying for.

      Both FHA and USDA are going to require a 3 year waiting period from the date your name was removed from title to the home. This is a matter of public record and should be able to be found online. You’re looking for the deed that transfers the home from you to the lender. This is the foreclosure date.

      Did you also file bankruptcy during this time? I ask because that could impact the waiting period if you are trying to apply for a conventional loan.

      If you would like an introduction to someone that I know and trust that can help you figure this out, I’m happy to do so.

      Just shoot me an email to scott@findmywayhome.com and let me know what State you’re in.

      Hope this helps?

  • Laura says:

    My husband and I got a Bankrupsty discharge in June 2018. Our home was included in the bankruptcy but we have stayed in the home and are current on the mortgage payments. We are now looking into moving to a new home but are told the home is not worth what we still owe. If we did a short sale or had a foreclosure this year, when would we be eligible for a new fha mortgage? Do we use the bankruptcy discharge date or the date our short sale/or foreclosure is finalized?

    • Scott Schang says:

      Hi Laura, great question, and I’m glad you’re asking before commit to selling the home. For FHA, there is a 3 year waiting period from either a short sale, deed in lieu, or foreclosure.

      Make sure you get a second opinion on the home value as well. Most Realtors will charge 5% to 6% of the sales price to sell your home. Could you pay off all liens if you did a for sale by owner and saved that money? Also, starting at the end of next month, you’re entering the spring/summer sales cycle. The majority of most homeowner’s equity is earned during this time.

      If you do have to move, or if you can stay here until your home value goes up, Conventional underwriting guidelines allow you to be eligible 4 years from the discharge of the bankruptcy, regardless of what happens with the current home. Short sale or foreclosure does not impact the Conventional waiting period.

      If you have further questions, you can email me directly to scott@findmywayhome.com and I’m happy to help you avoid any unexpected surprises!

      Hope this helps?

  • Guest says:

    Question on waiting period after a hardship short sale? I had submitted a request for a short sale due to a decrease in pay, and a new born on the way. Wells Fargo accepted after submitting paperwork, the house was sold in March of 2017, but on my credit report it shows the account was closed on September 2016 when we started the process. What would be my date to determin my waiting period?

    • Scott Schang says:

      This is a really good question and the answer will vary depending on several factors. The short answer is that the waiting period begins from the day that your name is removed from the title of the property, the day the new title is recorded in the homebuyer’s name.

      The longer, and more complicated answer is “how long” is the waiting period, and that depends on what type of loan you are trying to qualify for, and whether or not you are going to attempt an extenuating circumstances exception.

      If you would like to explore your options in more detail, feel free to shoot me an email to scott@findmywayhome.com and let me know what State you’re in. I can introduce you to someone that has a lot of experience with these guidelines and can help you navigate some of these questions.

      Hope this helps?

  • Keith says:

    I had a bankruptcy discharged in Aug of 2018 which included a property with an FHA loan. The house sold in April 2019. I also happen to be a veteran. I am trying to understand when I will be eligible to apply for a VA, FHA or conventional loan?

    • Scott Schang says:

      Hi Keith, first and foremost, thank you for your service! If you are eligible to take advantage of your VA home loan benefit, you would be eligible in 2 years from the discharge of the bankruptcy.

      When you say the home was “sold in April 2019”, did you sell the home and keep the equity? Or was the home taken by the bank through foreclosure proceedings?

      If the home was lost to foreclosure or deed in lieu of foreclosure, there is a 2 year waiting period from the date your name was removed from title. If it was a traditional equity sale (you paid off the FHA loan in full), then you only have the bankruptcy waiting period, which would make you eligible to buy again as soon as August 2020.

      Hope this helps?

  • Joe says:

    Hi there,

    My wife and I have done 2 fha mortgages. We bought our first home in CT. We sold that home for less than owed and paid off the difference we owed. We then moved to NY for a job relocation and bought another home under an fha mortgage.

    Needless to say we needed to move back to CT. We put the home on the market for a couple of months and got no activity. We were underwater again and didn’t have the funds to cover the difference at this point. We decided to file for bankcruptcy and go for the foreclosure route on the home.

    We are trying to figure out when we would be eligible again to purchase. I understand the 3 year waiting period but can’t for the life of me get an answer on when it starts.

    The home went to auction in 2016 and it appears it was bought by Wells Fargo, whom our mortgage was through. Does our 3 year waiting period start from that point or do we have to wait until they try and sell the property and an actually individual purchases the home?

    Any help would be greatly appreciated.