Home Loan After Bankruptcy And Foreclosure Mortgage Guidelines

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This BLOG On Home Loan After Bankruptcy And Foreclosure Mortgage Guidelines Was UPDATED On November 25th, 2018

What are the guidelines for mortgages for a home loan after bankruptcy and exclusion

Great news for home buyers is that they can now qualify for a home loan after bankruptcy and foreclosure with no waiting period requirements with our new NON-QM Loans.

There are waiting period requirements in qualifying for FHA, VA, USDA, and Conventional Loans

But homebuyers can use NON-QM Loans as bridge loans until they have met their waiting period requirements for traditional conforming home loans.

  • The impact of the real estate and banking collapse of 2008 has devastated tens of millions of Americans
  • Millions of hard-working folks have lost everything they have worked so hard for, especially their homes  
  • Those who are fortunate enough to recover from the severe housing and credit crash of 2008 often ask me if they can qualify to purchase a loan
  • A large percentage of my prospects have filed bankruptcy or had a foreclosure since 2008 and have been starting their lives all over again
  • Given the severe impact of the housing crumble, many have filed bankruptcy, foreclosure, completed a short sale, or issued a deed-in-lieu of foreclosure
  • As people rebuild their credit, a major concern they have is when they can be homeowners again
  • When can they be homeowners again? 
  • That is such a great practical common-sense question that is difficult to answer
  • Even though the government may have set certain waiting period guidelines, each individual lender might have stricter criteria, often called overlays

In this article, we will discuss and cover Home Loan After Bankruptcy And Foreclosure Mortgage Guidelines.

Waiting Periods To Qualify For Home Loan After Bankruptcy And Foreclosure

Federal Housing Administration (FHA) Insured Loan

Foreclosure –

  • 3 years from the recorded date of foreclosure and/or sheriff’s sale

Deed-in Lieu –

  • 3 years from the recorded date of foreclosure and/or date of sheriff’s sale

Short Sale –

  • The waiting period to qualify for FHA Loan after a short sale is 3 years from the date of the short sale that is reflected on the HUD-1 Settlement Statement

Bankruptcy (Chapter 7) –

  • 2 years from the Chapter 7 Bankruptcy discharge of Chapter 7.

Bankruptcy (Chapter 13) –

  • No waiting period from the discharged date of the Chapter 13 Bankruptcy discharged date with a manual underwriting
  • 2 years from Chapter 13 Bankruptcy dismissal date for automatic approval

Borrowers can qualify for FHA Loan 1 year into the Chapter 13 Bankruptcy

  • after 12 bankruptcy payments made
  • all payments were made on time as agreed
  • trustee approves the borrower’s new mortgage loan

Home Loan After Bankruptcy And Foreclosure On VA Loans

Veterans Administration (VA) Guaranteed Loan

Foreclosure –

  • 2 years

Deed-in Lieu –

  • 2 years

Short Sale –

  • 2 years

Bankruptcy (Chapter 7 or 11) –

  • 2 years from bankruptcy discharge (can be reduced to 1 year if there are “extenuating circumstances” and credit has been re-established)

Bankruptcy (Chapter 13) –

  • 2 years from bankruptcy discharge for automatic approval
  • But can be as low as 1 year after first bankruptcy payments made
  • Chapter 13 does not have to be discharged

If the borrower made all payments on time as agreed and receives permission from the bankruptcy court, borrowers can qualify for VA and/or FHA Loans during Chapter 13 Repayment Plan.

Conventional Loan After Bankruptcy And Foreclosure

What does conventional loan mean after bankruptcy and exclusion?

Conventional Conforming Mortgage Loan

Foreclosure –

  • Conventional Loans require a 7 year waiting period from the date of the foreclosure

Deed In Lieu Of Foreclosure:

  • Four year waiting period from the recorded date of the deed in lieu

Short Sale –

  • Four year waiting period from the date of short sale reflected on HUD-1 Settlement Statement

Bankruptcy (Chapter 7 or 11) –

  • 4 year waiting period from the discharged date of the Chapter 7 Bankruptcy

Bankruptcy (Chapter 13) –

  • 2 years waiting period from the discharged date of Chapter 13

Jumbo Mortgage Guidelines

Gustan Cho Associates Mortgage Group has non-QM jumbo mortgages with no waiting period after housing event and/or bankruptcy.

  • We also have 95% Loan To Value Jumbo Mortgages With No Private Mortgage Insurance
  • We have non-QM jumbo loan programs with credit scores down to 500 FICO
  • We offer bank statement Jumbo loans for self-employed borrowers with no mortgage insurance

Traditional Jumbo Mortgages

  • Foreclosure – 7 years.
  • Deed-in-Lieu – 4 Years
  • Short Sale – 4 Years
  • Bankruptcy – 4 Years

Mortgage Part Of Bankruptcy

Many consumers have their homes included in their Chapter 7 Bankruptcy.

  • Good news for Conventional Loans borrowers
  • Borrowers who had a mortgage or mortgages part of Chapter 7 Bankruptcy, the waiting period to qualify for Conventional Loans is four years from the discharged date of Chapter 7
  • The foreclosure can be recorded after the discharged date of Chapter 7
  • It does not matter with Fannie Mae and Freddie Mac
  • With FHA Loans, the three-year waiting period clock starts from the recorded date of the foreclosure after the Chapter 7 Bankruptcy

Qualifying For Mortgage After Bankruptcy And Foreclosure

How to qualify for a mortgage after bankruptcy and exclusion

There is life after foreclosure and bankruptcy.

  • I recommend that you consult a direct lender instead of a mortgage broker
  • Gustan Cho Associates at Loan Cabin Inc. is a direct lender and correspondent lenders with multiple investors
  • We can take your particular credit profile to the various different sources we have correspondent lending agreements with
  • A banker or mortgage banker only represent their own lending institution
  • If your credit profile does not meet their underwriting criteria, you are shot down and need to start all over again with another loan officer from a different lender

Gustan Cho Associates multiple direct correspondent lending relationships.

UPDATE On Home Loan After Bankruptcy And Foreclosure On Conventional Loans

There have been many changes with qualifying for a conventional home loan after bankruptcy and foreclosure since this mortgage blog article post was first written on Gustan Cho Associates.

  • The 20% down payment conventional loan program after two years after a deed in lieu of foreclosure and/or short sale is no longer in effect.
  • Now to qualify for a conventional loan after a deed in lieu of foreclosure and/or short sale, the new waiting period is four years with a 5% down payment.
  • Another positive change that came into effect with a conventional home loan after bankruptcy and foreclosure is that conventional homebuyers can now qualify for a conventional loan if they had mortgage part of bankruptcy four years from the discharge date of the Chapter 7 Bankruptcy even though the foreclosure was recorded at a later date.
  • The waiting period to qualify for a conventional loan after the recorded date of foreclosure still remains a 7-year waiting period

Gustan Cho Associates can also help homebuyers who recently went through bankruptcy and/or foreclosure with the all-new NON-QM Loans:

  • There is not waiting period after bankruptcy and foreclosure
  • However, a 10% to 20% down payment is required and the mortgage rates are slightly higher than conforming loans
  • NON-QM Loans are a great loan program for people with a recent bankruptcy and/or foreclosure to become homeowners again where they do not have to meet the mandatory waiting periods

Please contact us at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. Home buyers can also email us at gcho@gustancho.com.

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