Home Purchase After Bankruptcy And Foreclosure

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This BLOG On Home Purchase After Bankruptcy And Foreclosure Was UPDATED On December 10th, 2018

how to buy a home after bankruptcy and foreclosure

The real estate and credit collapse of 2008 has affected millions of homeowners.

  • The burst of the housing bubble not only set records in foreclosures but also affected many American workers with massive layoffs
  • Many business owners either went out of business or had a major reduction in business
  • The drastic loss of income forced many homeowners left with mortgage loan balances higher than what their home was worth in value
  • Many had to downsize to smaller homes due to the real estate meltdown
  • Most homeowners lost all of their equity in their homes
  • A large percentage of homeowners had mortgage loans that were higher than the value of their homes
  • Millions of Americans could not afford their sub-prime mortgage loans and had to resort to foreclosure
  • Economy has recovered
  • Home Purchase After Bankruptcy And Foreclosure is now possible with government loans and conventional loans
  • With our non-QM loans, there is no waiting period for Home Purchase After Bankruptcy And Foreclosure but 10% to 20% down payment is required

In this article, we will cover and discuss Home Purchase After Bankruptcy And Foreclosure.

Real Estate And Mortgage Meltdown Of 2008

As a result of this financial disaster, which many believe was the second great depression, a substantial percentage of homeowners were forced into bankruptcy, foreclosure, or short sale.

  • Many homeowners who lost their homes gave up on ever owning a home again
  • Many Americans who filed bankruptcy never thought they could purchase another home again
  • New mortgage regulations were created and implemented to help homeowners who lost their home to bankruptcy and foreclosure become homeowners again
  • Home Purchase After Bankruptcy And Foreclosure and short sale became possible
  • There are waiting periods Home Purchase After Bankruptcy And Foreclosure
  • NON-QM Loans and bank statement mortgage loans are becoming popular on Home Purchase After Bankruptcy And Foreclosure:
    • Non-QM loans do not require a waiting period after bankruptcy and/or foreclosure but do require 10% to 20% down payment

Qualifying For Mortgage After Short Sale

A short sale is a pre-foreclosure sale of the home in lieu of foreclosure proceedings which results in a reduced mortgage loan payoff amount.

  • The reduction of the mortgage loan balance is approved by the homeowners’ lender
  • The lender will approve an amount that is less than the total amount owed
  • The lender will take the reduced payoff amount and give permission to the homeowner to short sale the property
  • Short Sales are approved by lenders because the value of the home is less than the mortgage loan balance

Homeowners with a prior short sale can qualify for a new mortgage after meeting the mandatory waiting period after the short sale on the loan program they are applying for.

Conventional Loan After Bankruptcy And/Or Foreclosure

What does conventional loan mean after bankruptcy and/or exclusion

Home Buyers can qualify for a conventional loan after a short sale and/or deed in lieu of foreclosure after 4 years.

  • Conventional mortgage requirements for purchasing a home after bankruptcy, short sale, or foreclosure differs than those of other loan programs like FHA and VA loans

To qualify for a conventional home loan backed by Fannie Mae, the following conventional waiting guidelines apply.

How Long Should I Wait After Foreclosure, Deed In Lieu, Short Sale?

To qualify for a conventional mortgage loan after a foreclosure, the waiting period is 7 years from the date of the sheriff’s sale or the date the deed of the home was transferred out of the mortgage loan borrower’s name and into the mortgage lender’s name.

  • There used to be a two-year waiting period in order to apply for a conventional mortgage loan after a short sale and/or deed in lieu of foreclosure
  • Homebuyers had to put 20% down payment so that the loan to value is 80%
  • This is no longer effective
  • The waiting period has been changed to a 4-year waiting period after a deed in lieu of foreclosure and/or short sale to qualify for conventional loans
  • 3% down payment is required for first time home buyers
  • 5% down payment is required for seasoned home buyers

There is a 7-year waiting period in order to qualify for conventional loans after the recorded date of a standard foreclosure.

Qualifying for Conventional Home Purchase After Bankruptcy And Foreclosure

For conventional mortgage loans backed by Fannie Mae and/or Freddie Mac, there is a four-year waiting period to qualify for Conventional Loans After Chapter 7 Bankruptcy.

  • There is a two-year waiting period to qualify for Conventional Loan after Chapter 13 Bankruptcy discharged date
  • There is a four-year waiting period to qualify for conventional loans after a Chapter 13 Bankruptcy dismissal date

Qualifying For FHA Home Purchase After Bankruptcy And Foreclosure

How to Qualify for a FHA Home After Bankruptcy and Foreclosure

There are waiting period requirements to qualify for FHA Loans after bankruptcy and foreclosure.

  • There is a 3-year waiting period to qualify for FHA Loans after the recorded date of a foreclosure and/or deed in lieu of foreclosure
  • There is a two-year waiting period to qualify for FHA Loans After Chapter 7 Bankruptcy discharged date
  • There is no waiting period to qualify for FHA Loan after Chapter 13 Bankruptcy discharged date
  • Home Buyer who is currently in a Chapter 13 Bankruptcy Repayment Plan can qualify for FHA Loans one year into their Chapter 13 with Trustee Approval

To qualify for an FHA insured mortgage loan after a short sale, the waiting period is 3 years from the date of the short sale.

Home Purchase After Bankruptcy And Foreclosure On VA Loans

To qualify for VA Loans after a short sale, the waiting period is 2 years from the date of the short sale in order to qualify:

  • There is a two-year waiting period to qualify for VA Loans after the recorded date of deed in lieu of foreclosure
  • There is a two-year waiting period to qualify for VA Loans after the recorded date of a standard foreclosure
  • There is a two-year waiting period to qualify for VA Loans after Chapter 7 Bankruptcy
  • The requirements for a VA loan after a Chapter 13 bankruptcy, borrowers need to have entered into a payment plan for one year with all monthly payments made timely

The permission of the Bankruptcy Court is required to enter into the new mortgage loan.

Update On Qualifying For Conventional Loan With Mortgage Part Of Bankruptcy

Homebuyers who had mortgage part of Chapter 7 Bankruptcy, waiting period are four years from the discharged date of the Chapter 7 Bankruptcy.

  • The foreclosure and/or short sale can be recorded after the discharged date of Chapter 7
  • The four-year time clock starts the date of the discharged date
  • This does not apply to government loans (FHA, VA, USDA )
  • On government loans, the waiting period is four years from the recorded date of the deed in lieu and foreclosure or short sale date:
    • This is normally after the discharged date of the Chapter 7 Bankruptcy

Homebuyers are interested in purchasing a home after bankruptcy, deed in lieu, short sale or foreclosure can contact us at 1-262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com

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