FHA Loan Waiting Period After Bankruptcy And Foreclosure

There are mandatory waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale to qualify for a home loan.  Waiting period after Chapter 7  bankruptcy is two years from the discharged date of the bankruptcy to qualify for a FHA Loan.  Waiting period after filing a Chapter 13 Bankruptcy is one year into the Chapter 13 Bankruptcy with the approval of the Bankruptcy Trustee and timely payments for the past 12 months to qualify for a FHA Loan.  Waiting period after foreclosure and deed in lieu of foreclosure is three years from the recorded date that is reflected on the county recorder of deed’s office and posted on the county public records to qualify for a FHA Loan.  There is a three year waiting period after the date of the short sale that is reflected on the HUD Settlement Statement to qualify for a FHA Loan.

Conventional Loan Waiting Period After Bankruptcy And Foreclosure

Waiting Period after bankruptcy and foreclosure is different for conventional loans than it is for FHA Loans. There is a four year waiting period after the discharge date of a Chapter 7 Bankruptcy to qualify for a conventional loan.  There is a four year waiting period after a deed in lieu of foreclosure and short sale to qualify for a conventional loan.  There is a two year waiting period after Chapter 13 Bankruptcy discharge to qualify for a conventional loan.  There is a four year waiting period after a Chapter 13 dismissal to qualify for a conventional loan.  There is a four year waiting period after a deed in lieu of foreclosure and short sale to qualify for a conventional loan.  There is a seven year waiting period after a foreclosure to qualify for a conventional loan.

Home Loan After Mortgage Charge Off

A mortgage charge off is when a mortgage lender has charge off the mortgage loan off their books and decided not to pursue collection activities or go through foreclosure proceedings.  Many homeowners who fell victims to the 2008 real estate and mortgage meltdown tried to give back their properties to their mortgage lenders because they could not afford their home loan mortgage but many mortgage lenders did not want the property back and decided to just charge off the mortgage loan.  A home buyer with a mortgage charge off can qualify for a mortgage loan after a charge off after meeting minimum waiting periods after mortgage charge off.  You can get a FHA home loan after mortgage charge off three years from the date of the charge off that is recorded on the credit reporting agencies.  The three year waiting period on mortgage charge off waiting period applies to both a first mortgage and second mortgages.  If you had a first mortgage and second mortgage and both mortgages were charged off, the latter date of the mortgage charge off will be the start of the waiting period and you would need to wait three years from the latter mortgage charge off date to qualify for a FHA Loan.

No Overlays On Home Loan After Mortgage Charge Off

If you are a home buyer that needs a home loan after mortgage charge off, please contact Gustan Cho Associates at 262-716-8151.  We are a no mortgage lender overlays mortgage bankers and correspondent mortgage lenders.  Minimum credit scores to qualify for a 3.5% down payment FHA Loan is 580 FICO credit scores.  Debt to income ratios are capped at 56.9% back end.  Charge offs and unpaid collections do not matter and do not be settled to qualify for a FHA Loan.  Medical collections do not count.  Down payment can be gifted 100% by family members or close friends.  Non-occupant co-borrowers can be added to qualify for those who are self-employed or have no documented income.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

8 Comments

  1. Alicia Paulon says:

    Can loan be denied due to previous mortgage charge off?
    I was preappoved for a home loan and had a home built but now the underwriter wants to deny the loan because I had a previous mortgage that was charged off in 2012. In 2012 I tried to get the lender to modify the loan because it was underwater. They gave me the run around for almost a year. In April 2013 I received a letter from the lienholder in which held the mortgage that the lien was being released and that I could keep or sell the property. In July county records were update to reflect the lien was released and I fully owned the property. I never received any correspondence from the lienholder after the letter they sent in April 2013. In Oct 2013 I sold the home. Now the underwriter is sayting that I need to wait 3 years from April 2013 before I would be eligible for an FHA loan. The home was not sold in a short sale and I gave them proof of that by providing my HUD settlement statment that was done in closing. Is the underwriter correct or should I seek another lender? I am supposed to close next week.

    • Gustan Cho says:

      The underwriter in this case is correct. FHA guidelines state that the three year waiting period on a foreclosure starts from the date the deed was transferred out of your name and into the name of the lender and/or new home buyer. Even though the mortgage note was charged off in 2012, the actual transfer of the deed did not occur until October 2013 so the three year waiting period will start on October 2013. Your loan officer should have caught this prior to issuing a pre-approval. This rule is not a mortgage lender overlay and are FHA guidelines so seeking another mortgage lender will not help you. You may have some options and you are welcome to call me at 262-716-8151 to discuss.
      Was the mortgage note just under your name or was it under you and your spouse? If you were the one only on the note, your spouse may qualify for the mortgage and both you and your spouse can go on title.

      • Alicia Paulson says:

        I just looked at my credit report and this mortgage was included in my bankruptcy. On my credit report it reads: ” settlement accepted on this account; settled/paid in full less than full balance; chapter 7 bankruptcy; chapter 7; included in bankruptcy. Closed 6/08″

        Does the waiting period still apply?

        • Gustan Cho says:

          There are new Fannie Mae lending guidelines that got into effect last year where if you have a mortgage part of your bankruptcy, the waiting period to qualify for a conventional loan is 4 years from the discharged date of the Chapter 7 Bankruptcy and the actual recorded date of the foreclosure is waived. So if you had a mortgage part of your bankruptcy in January 2011 and the bankruptcy discharge date was January 2011 but your foreclosure was not recorded until January 2014, you will still qualify for a conventional loan since the waiting period started from your discharge date of January 2011. This is for conventional loans only and does not apply to FHA Loans. Here is a link that may help you:

          http://gustancho.com/2015-update-on-mortgage-part-of-bankruptcy

          • Alicia says:

            Thank you. I have sent you an email to follow up and possibly apply for a conventional mortgage through you.

          • Gustan Cho says:

            Thank you for the opportunity to help you get your home loan closed. We can do it via Conventional loan, Alicia, no problem. I received your online application. Kay Tassapat Sripetcharakool will be your assigned mortgage loan originator and Trish Mangiaracina will be your mortgage loan coordinator and processor. We will try to have this close in a few weeks, less than 30 days. Everybody is on alert. Have a great evening and we will be talking. I am available all weekend so please feel free to contact me if you have any questions.

            Kind regards,

            Gustan Cho

  2. Cheryl says:

    I will be making my final Chapter 13 payment during the next 30 days. I know that FHA says a new loan can be obtained after 1 year of timely Chapter 13 payments and court approval which I assume is for a refinance. I cannot, however, find anything on the waiting period for a purchase after a Chapter 13.

    All Chapter 13 payments were made on time and I paid my mortgage on time outside of the BK for the past 3 years. Can I obtain a new purchase FHA loan one day after receiving my discharge?

    • Gustan Cho says:

      Good afternoon Cheryl,

      Here are the rules to qualify for a FHA Loan with a Chapter 13 Bankruptcy which I will cover and answer your question:
      A home buyer can qualify for a 3.5% down payment home purchase FHA Loan with a minimum credit score of 580 FICO one year into the Chapter 13 Bankruptcy as long as they have been timely with all of their payments to their creditors and the approval of the trustee of their Chapter 13 Bankruptcy. In your case, your Chapter 13 Bankruptcy is almost over so in 30 days you will not be needing your Bankruptcy Trustee’s approval. You can qualify for a 3.5% down payment FHA Loan as long as you have been timely with all of your payments and have a 580 FICO minimum credit score. It will most likely be a manual underwrite and you should have no problem. One thing with manual underwriting is that the underwriter may ask you for verification of rent.
      The answer to your question is YES, you will definitely qualify for a FHA Loan one day after your Chapter 13 discharge date without no problem. Many lenders may have mortgage lender overlays where you may have to wait two years but I can help you no problem . If you have any questions please feel free to post them here or you can always call me at 262-716-8151 or email me at GLCProperties@aol.com. Best of luck to you 🙂

      Gustan Cho NMLS 873293
      http://www.gustancho.com
      262-716-8151