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Timeline For Mortgages After Short Sale, Foreclosure & Bankruptcy

Lately, we are often asked what the timeline (or waiting period) is for homebuyers who want to borrow money but have recently been through a short sale, foreclosure, or even a bankruptcy.

In the "good 'ol days," we did not get this question very often, as distressed home sales were usually limited to people who had undergone a significant life event.

Unfortunately, anybody who purchased a home from 2002 through 2007 is likely to consider that purchase a significant life event, as many are still upside-down on the purchase. This often leads to short sales, foreclosures or even bankruptcies in order for them to unravel themselves from their homes.

mortgage waiting periodOnce people have their credit renewed, they often want to know what it takes for them to borrow money again for the purpose of buying a home.

With this in mind, I've asked a trusted mortgage lender to update our readers on the waiting period required to obtain a new mortgage after one has undergone a short sale, foreclosure or bankruptcy.

(LTV = Loan To Value; For CH7 Bankruptcy, discharge date is used, not filing date)

Waiting Period After A Short Sale

  • Fannie Mae (Conventional) Loans - 2 years if borrowing 80% LTV, 4 years if borrowing 90% LTV, 7 years if borrowing above 90% LTV
  • Fredie Mac Loans - 4 years from completion date
  • FHA Loans - 3 years from completion date
  • VA Loans - Assume foreclosure rule of 2 years
  • USDA/Rural Development Loans - 3 years from completion date
  • Jumbo Loans - Based upon specific investor guidelines (for loans above the conforming limits)

Waiting Period After A Deed-In-Lieu-Of-Foreclosure

  • Fannie Mae (Conventional) Loans - 2 years if borrowing 80% LTV, 4 years if borrowing 90% LTV, 7 years LTV per eligibility matrix
  • Fredie Mac Loans - 4 years from completion date
  • FHA Loans - 3 years from completion date
  • VA Loans - Assume foreclosure rule of 2 years
  • USDA/Rural Development Loans - 3 years from completion date
  • Jumbo Loans - Based upon specific investor guidelines (for loans above the conforming limits)

Waiting Period After A Foreclosure

  • Fannie Mae (Conventional) Loans - 7 years from completion date
  • Fredie Mac Loans - 4-7 years up to 90% LTV, 7 years 90% LTV and above
  • FHA Loans - 3 years from completion date
  • VA Loans - 2 years from completion date
  • USDA/Rural Development Loans - 3 years from completion date
  • Jumbo Loans - Based upon specific investor guidelines (for loans above the conforming limits)

Arbor HillTallahasseeUse a "TBD" loan to give home sellers what they want. Cash! And a fast closing date.

Get fully underwritten approval before you go to contract. This means that your loan is only conditional on your inspection and appraisal. Let us show you how!

Waiting Period After CH7 Bankruptcy

  • Fannie Mae (Conventional) Loans - 4 years from discharge date
  • Fredie Mac Loans - 4 years from discharge date
  • FHA Loans - 2 years from discharge date, 7 years for high balance conforming
  • VA Loans - 2 years from discharge date
  • USDA/Rural Development Loans - 3 years from discharge date
  • Jumbo Loans - Based upon specific investor guidelines (for loans above the conforming limits)

Waiting Period After CH13 Bankruptcy

  • Fannie Mae (Conventional) Loans - 2 years from discharge date
  • Fredie Mac Loans - 2 years from discharge date
  • FHA Loans - 1 year of BK payments must be made and payment performance must be satisfactory. Buyer must receive permission from BK court to enter into mortgage transaction
  • VA Loans - 1 year of BK payments must be made and payment performance must be satisfactory. Buyer must receive permission from BK court to enter into mortgage transaction
  • USDA/Rural Development Loans - 1 year of BK payments must be made and payment performance must be satisfactory. Buyer must receive permission from BK court to enter into mortgage transaction
  • Jumbo Loans - Based upon specific investor guidelines (for loans above the conforming limits)

It's important to note that these guidelines are a moving target and can change at any time. Rather than rely on the information provided above, it would make more sense to talk with a trusted lender to see what the current timelines appear to be. We can help you with that when you are ready.

If you would like to know more about how long you must wait after a distressed property sale or bankruptcy, just drop me a note and we will be in touch with you immediately.

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2066 Thomasville Rd
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(850) 366-8917

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