FNMA Waiting Period Guidelines After Foreclosure For 2025

In this blog, we will cover and discuss FNMA waiting period guidelines after foreclosure for 2025. Conventional loans are often referred to as conforming loans because they need to conform to Freddie Mac and/or Fannie Mae guidelines.

If lenders do not make sure conventional loans they originate and fund do not conform to FNMA or Freddie Mac agency mortgage guidelines, the two giant GSEs (Government Sponsored Enterprises) will not purchase them in the secondary market.

Fannie and Freddie are the two largest buyers of mortgages on the secondary mortgage markets.  Conventional loans are called conforming loans because they need to conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines. The Federal Housing Finance Agency (FHFA) is the federal regulatory agency that regulates Fannie Mae and Freddie Mac.

Difference Between Conforming Versus Government Loans

Conforming loans are not government loans. The reason lenders conform to Freddie Mac and Fannie Mae Guidelines is Fannie/Freddie will not purchase conventional loans that do not conform to their lending guidelines. Fannie Mae is more popular than Freddie Mac. Both mortgage giants have similar mortgage guidelines. There are mandatory waiting period requirements after the housing event to qualify for conventional loans

What Is A Housing Event?

A housing event is the following:

• Foreclosure
• Deed In Lieu Of Foreclosure
• Short Sale

Changes And Updates on FNMA Waiting Period Guidelines on Foreclosure Versus Deed In Lieu And Short Sale

The 2-year waiting period after a short sale and deed in lieu of foreclosure with a 20% down payment to qualify for a conventional loan came to a halt effective midnight on August 15, 2014. New Fannie Mae Guidelines will eliminate the 2-year waiting period after a short sale and deed in lieu of foreclosure. The updated new Fannie Mae guidelines in qualifying for conventional loans after a deed in lieu and/or short sale is now 4 years.

What Is The FNMA Waiting Period After Foreclosure vs Deed In Lieu on Conventional Loans?

Buyers used to be able to qualify for conventional loans 2 years after a short sale or deed in lieu as long as the home buyer had a 20% down payment and re-established credit. There is a 4 year waiting period after a short sale or deed in lieu of foreclosure to qualify for a conventional loan as long as the home buyer has a 5% down payment. There is a seven-year waiting period to qualify for conventional loans after a regular foreclosure.

FNMA Waiting Period Guidelines After Foreclosure vs Deed In Lieu of Foreclosure

The waiting period requirements after foreclosure are different than the waiting period after a deed in lieu and short sale on conventional loans. Homebuyers who have the 5% down payment and had a short sale or deed in lieu of foreclosure can now qualify for conforming loans after meeting a four-year waiting period. First-time homebuyers can qualify for a conventional loan with a 3% down payment on a home purchase. A first-time homebuyer is defined as someone who did not have ownership of a home in the past three years. Borrowers need re-established credit after the housing event.

Fannie Mae Credit Guidelines on Conventional Loans

Fannie Mae guidelines on conforming loans after a housing event allow borrowers to qualify for a conventional loan after a foreclosure, deed in lieu of foreclosure, and a short sale as long as the borrower meets the waiting period requirements. Fannie Mae Credit Guidelines on Conventional loans are straightforward. A prior bankruptcy and/or a housing event does not affect the rates on conventional loans as long as the borrower has met the waiting period requirements. You cannot have any late payments after the housing event. The minimum credit score requirement on conventional loans is 620 FICO credit scores.

Fannie Mae Private Mortgage Insurance Guidelines

The borrower needs to meet all other Fannie Mae and/or Freddie Mac conforming mortgage guidelines. Private Mortgage Insurance is required on buyers who put in less than a 20% down payment. Private mortgage insurance can drop off if the homeowner reaches under 80% loan to value on conventional loans. FHA loans require FHA annual mortgage insurance premium for the life of a 30-year fixed-rate mortgage and cannot be canceled. This holds true no matter how low the loan to value is.

Waiting Period on Conventional Loans With a Prior Mortgage Included in Bankruptcy

Fannie Mae’s guidelines on conforming to loans after a housing event with a mortgage included in bankruptcy are unique. The waiting period for borrowers who have a mortgage included in bankruptcy starts from the bankruptcy discharged date. Guidelines On Conforming Loans After Housing Event on FHA loans are different. FHA loan guidelines for borrowers with a mortgage included in bankruptcy do not start until the finalization of the housing event.

FNMA Waiting Period Guidelines After Short Sale on Conventional Loans

The 4 years waiting period after a short sale or deed in lieu of foreclosure comes with good news. The housing event can happen after the discharge date. For example, if a homeowner had a mortgage included in their Chapter 7 Bankruptcy, the waiting period for them to qualify for a conventional loan is four years from the discharge date. This only holds true if they did not reaffirm the mortgage. The finalization of the housing event does not matter.

When Is The FNMA Waiting Period Start Date on Conventional Loans With a Prior Mortgage Included in My Bankruptcy?

Fannie Mae guidelines on conforming loans after housing event waiting period start date depends on each individual type of event. Fannie Mae and Freddie Mac only go off the discharge date of the bankruptcy.

HUD Guidelines require the waiting period to start from the recorded date of the foreclosure, deed in lieu of foreclosure, or short sale and not the discharged date of the bankruptcy.

There is a three-year waiting period after the finalization of the housing event to qualify for FHA loans. Borrowers who had a prior mortgage included in Chapter 7 Bankruptcy but had the housing event finalized at a later date may only qualify for a conventional loan.

FNMA Down Payment Requirement on Conventional Loans

Currently, the waiting period is 4 years after a short sale or deed in lieu of foreclosure for home buyers with only a 5% down payment. A 3% down payment on a home purchase is available for first-time homebuyers. Fannie Mae and Freddie Mac define first-time homebuyers are homebuyers who had no ownership of a home in the past three years. Private Mortgage Insurance (PMI) is required on conventional loans with higher than 80% LTV. If the property appreciates and the loan to value falls at and/or below 80% LTV, the PMI can drop off.

Fannie Mae And Freddie Mac Guidelines on Student Loans

Deferred student loans are not accepted on conventional loans. Income-Based Repayment (IBR) is allowed on conventional loans. This holds true even though the income-based repayment is a zero payment. IBR payments need to report on the borrower’s credit report. If IBR does not report on the credit report, the lender needs to do a credit supplement.

Deferred Student Loan Guidelines on Conventional Loans

Fannie Mae and Freddie Mac do not accept deferred student loans. If the borrower has a large student loan balance, Fannie Mae and Freddie Mac require 0.50% of the outstanding loan balance to be used as a monthly hypothetical debt. HUD has exactly the same student loan guidelines as Fannie Mae and Freddie Mac. HUD allows IBR payments on FHA loans. HUD does not allow deferred student loans even though the deferred student loan is longer than 12 months. HUD allows income-based repayment on FHA loans.

Conventional Loans With Bad Credit

Just waiting out the waiting period and having the 3% to a 5% down payment is not the only qualification. Re-established credit with timely payments is required. Having a history of late payments, collections, charge-offs, and judgments after the short sale and/or deed in lieu of foreclosure is normally a deal killer. One or two late payments after bankruptcy and/or foreclosure are not always a deal killer. It depends on the automated underwriting system findings. Gustan Cho Associates offers one day out of foreclosure and one day out of bankruptcy non-QM loan programs.

Non-QM Loans One Day Out Of Foreclosure And Bankruptcy

Gustan Cho Associates has non-QM home loan mortgage programs where there is no mandatory waiting period after a housing event and no waiting period after bankruptcy.

In a booming housing market where home prices are skyrocketing, many home buyers can benefit with non-QM loans one day out of foreclosure and/or bankruptcy with a 30% down payment.

Home Buyers who need to qualify for conforming or government loans or non-QM loans with a mortgage company licensed in multiple states can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, on evenings, weekends, and holidays.

NON-QM Mortgages With No Waiting Period After Housing Event

Gustan Cho Associates now offers non-QM mortgages with no waiting period after housing event. Home Buyers can qualify for non-QM loans one day out of foreclosure, deed in lieu of foreclosure, short sale. 10% to 20% down payment is required. The amount of down payment depends on the borrowers’ credit scores.

The great news with non-QM loans is that no private mortgage insurance is required. There are no loan limits like government and conventional loans. Non-QM Jumbo Mortgages are becoming increasingly popular.

NON-QM Loans for self-employed borrowers do not require any income tax returns. 12 months bank statement deposits are averaged to determine borrower’s monthly income. Up to 50% debt to income ratios allowed.

FNMA Waiting Period Guidelines After Foreclosure For 2025

FNMA Waiting Period Guidelines After Foreclosure for 2025 Explained. Learn the 7-year and 3-year rules, short sale timelines, and how to qualify for a conventional loan again.

It’s tough, both emotionally and financially, coming back from foreclosure. However, it doesn’t mean the dream of homeownership is gone forever. FNMA has specific rules regarding the waiting period after a foreclosure to qualify for another conventional mortgage.

For the year 2025, the fundamental FNMA waiting period guidelines after foreclosure still reference the Fanny Mae Selling Guide section B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit. In this article, we are going to simplify these rules and talk about exceptions, as well as explain how a no-overlay lender can assist you to qualify for a conventional loan immediately when you are eligible.

What Are the FNMA Waiting Period Guidelines After Foreclosure For 2025?

Fannie Mae considers a foreclosure a significant derogatory credit event. Large events of this nature include:

• Bankruptcy
• Deed-in-lieu of foreclosure
• Pre-foreclosure or short sale
• Charge-off of a mortgage loan

As a result of these events being credit-damaging, FNMA must impose a minimum seasoning period, termed a waiting period, before you can obtain a new conventional mortgage that Fannie Mae will purchase.

• The waiting period is measured from the completion date of the foreclosure, and not the date of the first delinquent payment.
• You must also demonstrate that you have re-established credit and are now a responsible borrower.

Standard FNMA Waiting Period After Foreclosure (7-Year Rule): How Long is the FNMA Waiting Period After Foreclosure In 2025?

• According to the latest Fannie Mae guidelines, the standard waiting period after foreclosure is 7 (seven) years.

Those seven years start from the completion date of the foreclosure action as reported on:

• Your credit report.
• Official foreclosure documents (Ex, sheriff sale date, deed recording).

To qualify after the 7-year FNMA foreclosure waiting period, you also need to:

• Meet FNMA credit & income requirements.
• Get an Approve/Eligible from Desktop Underwriting (DU).
• Fannie Mae’s automated underwriting system.
• After the full seven years, assuming you’ve recovered credit, you would qualify for the standard maximum LTVs Fannie Mae allows (loan-to-value ratios).
• That’s assuming you meet all guidelines.

3 Year FNMA Waiting Period after Foreclosure with Extenuating Circumstances

What are Extenuating Circumstances Under FNMA Guidelines?

Fannie Mae provides a shorter waiting period of 3 years after foreclosure if you can show extenuating circumstances.

Extenuating circumstances are when:

• Nonrecurring events that are beyond the borrower’s control, resulting in a sudden and significant decline in income or a catastrophe with an increased financial burden that persists for an extended period.

Examples of Extenuating Circumstances Include:

• Major medical emergencies or serious illness.
• Death or disability of a primary wage earner.
• Sudden company closure or layoffs with prolonged loss of income.
• Natural disaster resulting in severe financial hardship.
• Extenuating circumstances do not include simply overspending or divorce alone, or simply mismanaging credit.

Additional Parameters Between Years Three and Seven

If you qualify for the 3-year FNMA foreclosure waiting period with extenuating circumstances, there are additional restrictions between years 3 and 7:

• Maximum LTV/CLTV/HCLTV is the lesser of 90% or the default program maximum.
• Purchases are for a primary residence only.
• Limited cash-out refinance is allowed for all occupancy types (subject to LTV guidelines).
• No cash-out refinance and no purchase of second homes or investment properties until a full 7 years have elapsed.
• This means you can buy a primary residence with a 10% down payment only three years after the foreclosure, provided you have documented extenuating circumstances and meet all other eligibility requirements.

FNMA Waiting Period After Deed-in-Lieu, Short Sale, and Mortgage Charge-Off

• Some serious housing events do not end in a full foreclosure.
• Homeowners have several voluntary, alternative options, including negotiated foreclosure (also known as a Deed-in-Lieu of Foreclosure), Pre-Foreclosure Sale (also referred to as a Short Sale), and Dummy Mortgage Charge-off.
• Under FNMA, as of 2025, the above events have waiting periods, similar to those of a normal foreclosure.

In chronological order, they are as follows:

Standard Waiting Period 4 Years Completion Date of Deed-in-Lieu, Short Sale, or Mortgage Charge Off

• With extenuating circumstances: 2 Years Completion Date of Deed-in-Lieu, Short Sale, or Mortgage Charge Off.
• The standard waiting period is measured against the completion date, which is verified using the title, closing documents from the short sale, or another official document.

FNMA Waiting Period When The Mortgage Was Included In Bankruptcy

Mortgage Discharged In Chapter 7 Or Chapter 13

• The FNMA Discharge Policy is one of the most important policies FNMA has.
• This specifically relates to circumstances in which Mortgage Debt Was Included In Bankruptcy, and subsequently, the property is foreclosed.

According to Fannie Mae, in cases where:

• The mortgage debt has been discharged in a Chapter 7 and Chapter 13 bankruptcy, and
• The lender can demonstrate that the mortgage was included and must provide evidence of the mortgage debt included.
• Then, the lender can choose the Bankruptcy waiting period, as opposed to the more extended waiting period for foreclosure.

This is good news because Fannie Mae’s bankruptcy waiting period is:

• Chapter 7 or 11: 4 years from discharge or dismissal (2 years with extenuating circumstances).
• Chapter 13: 2 years from discharge, or 4 years from dismissal (possibly 2 with extenuating circumstances).
• Suppose the lender can’t document that the mortgage was discharged in the bankruptcy. In that case, they must use the longer waiting periods— bankruptcy or foreclosure.

FNMA Waiting Period Guidelines Before Other Mortgage Programs: FHA, VA, and USDA

Also, when deciding on future purchases of homes after foreclosures, you can compare FNMA Waiting Period Guidelines against other mortgage programs:

Most of the mortgage industry, while each company has the option to add other rules, looks like this:

• Fannie Mae (Conventional) – Foreclosure
• 7 years as standard
• 3 years. If you have extenuating circumstances and added restrictions
• FHA – Foreclosure or Short Sale
• 3 years is standard to wait after the foreclosure or short sale is completed

VA – Foreclosure

• 2 years is common to wait after the foreclosure, or deed-in-lieu
• 3 Years on USDA Lo – Foreclosure or Short Sale
• 3 years is standard

Due to the above differences, some borrowers decide to:

• Quickly purchase again using FHA or VA, then.
• Later, refinance to an FNMA conventional loan after they have completed the FNMA waiting period guidelines, after foreclosure, and meet the required standards for equity and credit.

How FNMA & Desktop Underwriter Handle Prior Foreclosure

• Fannie Mae Desktop Underwriter (DU) pulls your credit report and can spot previous foreclosures and other major derogatory marks.
• The system analyzes the dates each loan was reported on the credit file and uses this information to determine eligibility.

But the lender still has to:

• Confirm the foreclosure documents or public records for the actual completion date.
• Ensure the waiting period is fully satisfied by the time the new loan is disbursed, not just by the date of the DU credit report.
• The borrower may initially receive an “Ineligible” or “Refer” recommendation if the event appears to be too recent.
• Documenting the correct date, ensuring sufficient time has passed, and obtaining an updated credit report, along with a new DU run, may yield an Approve/Eligible finding.

Re-Establishing Credit During The FNMA Waiting Period After Foreclosure

Fannie Mae expects borrowers to meet the calendar timeframe, but also requires them to re-establish credit and demonstrate responsible borrowing behavior during the waiting period.

• When it comes to rebuilding your credit after a mortgage foreclosure, here are some practical things to focus on immediately, while waiting out the mandatory waiting period:
• Keep paying your bills on time. It’s vital to stay on time with your payments during the waiting period on everything, especially housing and auto loans.
• Rebuild your credit trade lines. Try to keep a few credit cards and loans active and in good standing.
• Keep your credit card balances down. Keeping your credit card balances below 30% of your credit limit is ideal.
• Stop your derogatory remarks. Eliminate new collections, charge-offs, and judgments.
• Keep your income and employment stable. Lenders and Desktop Underwriters (DU) have a clear preference for stable employment because of the ratios between income and debt.

When rebuilding credit after foreclosure, it is contrary to the waiting period to have a credit behavior that is demonstrably free from any blemish during the waiting period.

Working With No Overlay Lender On FNMA Waiting Period Guidelines

Some lenders add what are known as overlays—meaning additional restrictions that are stricter than the minimum requirements published by Fannie Mae.

Common overlays after foreclosure are:

• 8-10 years instead of 7.
• No 3-year extenuating circumstance option.
• Ignoring the mortgage-included-in-bankruptcy policy.
• Harsher minimum credit scores than what are required by FNMA.

No overlay lenders that do follow FNMA waiting period guidelines after foreclosure for 2025 can:

• Follow the 3-year extenuating-circumstances path if properly documented.
• Follow the bankruptcy waiting period when your mortgage was discharged in BK.
• Collaborate with the DU findings, updated credit reports, and full doc to the max to help get you an Approve/Eligible when the waiting period is officially over.

This is significant for borrowers who have been previously denied by banks that have overlays.

No Overlay Lender

FAQs About FNMA Waiting Period Guidelines After Foreclosure For 2025

What is the FNMA waiting period after foreclosure in 2025?

• The standard waiting period for FNMA after foreclosure is 7 years, starting from the date the foreclosure is completed.
• After 7 years, if you have the credit, income, and automated underwriting requirements, you may qualify for a conventional mortgage.

Can Fannie Mae loans be obtained 3 years after foreclosure?

• Yes, but only in specific circumstances.
• Fannie Mae permits a 3-year waiting period after foreclosure, provided you can show extenuating circumstances such as severe illness, a wage earner’s death, or a sudden long-term job loss.
• Between years 3 and 7, there are also other LTV and property type restrictions.

What is the start date of the FNMA foreclosure waiting period?

• The waiting period starts from the completion date of the foreclosure action, and not when you miss the first payment.
• This date is typically after the sheriff’s sale, trustee’s sale, or the deed transfer back to the lender, as indicated in public records or foreclosure documents.

What are the FNMA waiting period guidelines after a short sale or deed-in-lieu?

For a short sale ( pre-foreclosure), deed-in-lieu, or mortgage charge-off, FNMA guidelines generally require:

• 4-year waiting period (standard), or
• 2-year waiting period with documented extenuating circumstances.
• These timelines are shorter than the 7-year waiting period applied for a full foreclosure.

Are bankruptcies and foreclosures treated differently by Fannie Mae?

• Yes.
• Should your mortgage debt be discharged in bankruptcy, Fannie Mae is likely to permit the lender to apply the bankruptcy waiting period in foreclosure.
• The reality is that there is a longer waiting period.
• It is possible to document that the mortgage was part of the bankruptcy.
• In the absence of that document, the lender is required to utilize the longer of the two waiting periods, to be clear.

Comparing waiting period guidelines for FNMA, FHA, and VA.

• FNMA (Conventional) 7 years after bankruptcy/foreclosure waiting period (3 years with extenuating circumstances).
• FHA: Typically, 3 years after bankruptcy/foreclosure or short sale.
• VA: Commonly 2 years after bankruptcy/foreclosure, or deed-in-lieu.
• USDA: Usually 3 years after any of the above situations.

Because of these variations, some borrowers obtain an FHA or VA loan first to purchase a home and then refinance to a Fannie Mae conventional loan once they have met the minimum waiting period requirement.

What is the Minimum Credit Score Required for a Fannie Mae Loan After Foreclosure?

The Federal National Mortgage Association does not set a unique credit score for applicants with a history of foreclosure. However, applicants are required to follow the **conventional minimum** credit score guidelines and receive an Approve/Eligible status within the Desktop Underwriter (DU) system. Many applicants are accepted with credit scores in the 600s, provided they have a track record of making timely payments and a favorable debt-to-income ratio.

Can an Overlay Lead to a Longer Waiting Period than FNMA Guidelines?

• Yes.
• Many financial institutions and mortgage lenders apply what is known as an ‘overlay, which requires a longer wait time (8-10 years) after the foreclosure is completed, and a higher credit score is required than the minimums specified by FNMA.
• You can qualify earlier if you work with a no-overlay lender who adheres to FNMA waiting period policies post foreclosure for 2025.

What Can Be Done to Maximize the Chances of FNMA Approval After the Waiting Period?

Concentrate on the following:

• Timely payments for the last 12-24 months.
• Credit cards with low outstanding balances.
• Consistent income and job stability.
• Having a manageable total debt.
• Not having any new collections or derogatory accounts.
• Suppose you have credit issues and have passed the FNMA waiting period after foreclosure, with a strong overall profile. In that case, you can help the system return an Approve/Eligible recommendation.
• Can I further assist you in adding GCA-style CTAs, interlinking to important pages on gustancho.com, and recommended external authoritative links so this can be a fully ready-to-go landing page for 2025?

New Fannie Mae Waiting Period Guidelines After Housing Event

The new Fannie Mae waiting period guidelines after a conventional mortgage loan borrower to qualify for a conventional loan after a short sale or deed in lieu of foreclosure is now 4 years:

• Fannie Mae changed the two-year waiting period requirement with 20% down payment after a short sale or deed in lieu of a mandatory 4 year waiting period
• There is good news for borrowers who do not have the 20% down payment and only have the 5% down payment on a home purchase
• Home Buyers no longer need a 10% down payment to qualify for a conventional loan after the 4 year waiting period requirement
• Fannie Mae will allow a home buyer to only put a 5% down payment on a home purchase
• Borrowers can qualify for a conventional mortgage loan 4 years after a short sale or deed in lieu of foreclosure

This article on Fannie Mae Guidelines On Conforming Loans After Housing Event was updated on November 21zt, 2025.

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