Mortgage Options After Foreclosure and Bankruptcy in 2022

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss the various mortgage options after foreclosure and bankruptcy for homebuyers. We will cover the mortgage options after foreclosure and bankruptcy with traditional and non-QM loans.  Government and conforming mortgage loans have a mandatory waiting period after foreclosure and bankruptcy. Many homebuyers are witnessing the booming housing market with no signs of a housing correction. Many homebuyers in high-priced states are already priced out of the housing market. This is why many people are migrating to lower taxes states with affordable housing so they have an opportunity to buy a house. Gustan Cho Associates are mortgage brokers licensed in 48 states. We have over 170 wholesale mortgage lenders with many mortgage options after foreclosure and bankruptcy with no waiting period requirements. In this article, we will cover and discuss mortgage options after foreclosure and bankruptcy with traditional and non-QM mortgages.

Non-QM Mortgage Options After Foreclosure and Foreclosure With No Waiting Period Requirements

Non-QM Mortgage Options After Foreclosure and Foreclosure With No Waiting Period Requirements

The only mortgage options after foreclosure and bankruptcy are non-QM loans. Non-QM loans do not mandate a waiting period after foreclosure and bankruptcy to qualify for a mortgage. However, a 30% down payment is required on non-QM loans one day out of foreclosure and bankruptcy. Non-QM mortgage options after foreclosure and bankruptcy are for owner-occupant, second homes, and investment properties. However, all NON-QM Loans require 20% to a 30% down payment and have higher mortgage interest rates. In this article, we will cover and discuss mortgage options after foreclosure and bankruptcy on traditional and non-prime mortgages. We will cover how to compare traditional and non-prime mortgage options after foreclosure and bankruptcy available to homebuyers.

How To Get a Mortgage After Foreclosure and Bankruptcy

Mortgage options after foreclosure and bankruptcy for homebuyers to qualify for home loans with no waiting period are non-QM mortgages. Gustan Cho Associates offers the following mortgage loans with no waiting period requirements after bankruptcy and/or foreclosure.

  • NON-QM mortgage loans with no waiting period after foreclosure, deed in lieu of foreclosure, short sale
  • NON-QM home loans with no waiting period after Chapter 7 Bankruptcy discharged date
  • Bank Statement Loans For Self-Employed Borrowers where no tax returns are required and no waiting period after bankruptcy and/or foreclosure
  • With bank statement loans, income is calculated by averaging 12 months of either business or personal bank statements with no waiting period after bankruptcy and/or foreclosure

Almost all mortgage loan programs have waiting period requirements after foreclosure and bankruptcy to qualify for a mortgage with the exception of NON-QM loans. There are mortgage options after foreclosure and bankruptcy for homebuyers with no waiting period. The best mortgage options after foreclosure and bankruptcy with no waiting period requirements are non-QM loans. However, a 20% to 30% down payment is required if you choose mortgage options after foreclosure and bankruptcy with non-QM and non-prime loans.

How Soon Can I Get a Mortgage After Foreclosure and Bankruptcy

The real estate and mortgage meltdown of 2008 has struck this country and the world like a category 5 hurricane. Countless families lost their homes to foreclosure, deed in lieu of foreclosure, or short sale. New banking rules and regulations were created. The waiting period after foreclosure and bankruptcy to qualify for a mortgage was created for all mortgage loan programs and implemented. The Great Recession has caused the massive depreciation of real estate market values as well as massive layoffs. Company shutdowns have resulted in many homeowners and American workers having their own financial crises. Never in history has a recession affected so many Americans. Many homebuyers were limited with mortgage options after foreclosure and bankruptcy.

Mortgage Options After Foreclosure and Bankruptcy During Bad Economic Times

During tough economic times such as we are experiencing today with surging inflation rates and skyrocketing interest rates, bankruptcy and foreclosure rates soar. Back in the 2008 post Great Recession era, bankruptcies were filed left and right. Every American family knows of friends and family who have filed bankruptcy or have fallen behind on their monthly payments which really affected their financial being. Others have lost their homes via foreclosure, deed in lieu of foreclosure, or short sale. Those who are Americans who fell victim to the real estate and credit meltdown of 2008 may be wondering when they can ever become homeowners again.  I will cover in this mortgage blog post the federal guidelines and the waiting period after foreclosure and bankruptcy to qualify for a mortgage.

Conventional Loan Waiting Period Guidelines After Short Sale and Deed In Lieu Of Foreclosure

The waiting period after foreclosure and bankruptcy rules and regulations were created and implemented. People who had a deed in lieu of foreclosure and short sales had to meet the waiting period requirements as well. A short-sale, also known as a pre-foreclosure real estate sale, is the sale of residential property in lieu of foreclosure. This results in a mortgage payoff that is less than the original amount owed or the current balance which is approved by the lender.

How Can I Qualify For a Conventional Loan After Foreclosure and Bankruptcy

How Can I Qualify For a Conventional Loan After Foreclosure and Bankruptcy

To qualify for a conventional mortgage after a homeowner had a prior short-sale and/or deed in lieu of foreclosure, the following waiting period guidelines by Fannie Mae will apply. There is a four-year waiting period for a mortgage loan. The maximum LTV, also known as loan to value, of 95%. What this means is that the home buyer needs to put a 5% down payment. There is a 7-year waiting period for a conventional mortgage loan after the recorded date of a standard foreclosure. Fannie Mae and Freddie Mac are the two mortgage giants that set the mortgage guidelines for conventional loans. Fannie and Freddie have different Waiting Period Requirements after Short Sale and Deed In Lieu Of Foreclosure versus standard foreclosure.

FHA Loan Waiting Period Guidelines After Foreclosure and Bankruptcy

The waiting period after foreclosure and bankruptcy to qualify for FHA loans is a 2 Year Waiting Period After the Chapter 7 Bankruptcy discharged date. Borrowers can qualify for FHA loans one year into a Chapter 13 Bankruptcy Repayment Plan. There are no waiting period requirements to qualify for FHA loans after a Chapter 13 Bankruptcy discharged date. There is a 3 Year Waiting Period to qualify for FHA loans after the recorded date and/or sheriff’s sale date of deed in lieu of foreclosure and/or foreclosure. The waiting period is a 3 Year Waiting Period to qualify for FHA loans after a short sale

VA Loan Waiting Period Guidelines After Foreclosure and Bankruptcy

VA loans have a shorter waiting period after foreclosure and bankruptcy to qualify for a VA loan. There is a 2-year waiting period after the Chapter 7 Bankruptcy discharge date to qualify for VA loans. Veteran borrowers can qualify for VA loans one year into a Chapter 13 Bankruptcy repayment period. There is no waiting period after the Chapter 13 Bankruptcy discharged date. There is a 2 year mandatory waiting period after a prior short-sale for a home buyer to qualify for a VA mortgage loan. There is a 2-year waiting period after the recorded date and/or sheriff’s sale of foreclosure and/or deed in lieu of foreclosure

Conventional Loans After Bankruptcy

Here are the Fannie Mae and Freddie Mac Guidelines to qualify for conventional loans after bankruptcy:

  • The qualification requirements to apply for a conventional mortgage loan after the Chapter 7 bankruptcy discharge date is 4 years
  • For a Chapter 13 bankruptcy filing, the mandatory waiting period is 24 months from the filing date and 48 months from the dismissal date of the Chapter 13 bankruptcy.

FHA Loan Guidelines During and After Chapter 13 Bankruptcy

The qualification requirement to qualify for an FHA-insured mortgage loan after the homeowner files a Chapter 13 bankruptcy can qualify for an FHA loan during a Chapter 13 Bankruptcy repayment plan. The borrower needs to document that a minimum of at least one year into the planned bankruptcy payment plan has passed. Provide documentation that all payment plans to the creditors have been made on time without any late payments. In the event, that the borrower is still in a Chapter 13 repayment plan, the borrower needs to get permission from the courts in order to enter a new mortgage. In the event, that the borrower is still in a repayment plan on his or her Chapter 13, the overall monthly repayment amount will be included in qualifying for the borrower’s overall debt to income ratios.

VA Loan Requirements During and After Chapter 13 Bankruptcy

VA Loan Requirements During and After Chapter 13 Bankruptcy

The qualification requirements to obtain a VA loan after a prior bankruptcy filing, the mandatory waiting period is two years from the discharge date of the bankruptcy.  The qualification requirement for a borrower who has filed a prior Chapter 13 bankruptcy, the borrower needs a one-year payment plan, and all monthly payments needed to be paid on time.  The permission of the courts granting approval to the borrower entering into a new residential mortgage loan is mandatory as well. VA loans during Chapter 13 Bankruptcy are great mortgage options after foreclosure and bankruptcy if you are eligible for VA loans.

Update on Conventional Loan After Deed In Lieu And Short Sale

New Fannie Mae Guidelines came effective last August 15, 2015, on qualifying for a conventional loan after a deed in lieu of foreclosure and short sale.  The two-year waiting period to qualify for a conventional loan after a deed in lieu of foreclosure and short sale with a 20% down payment no longer is effective.  New guidelines to qualify for a conventional loan after a deed in lieu of foreclosure and a short sale is 4 years from the recorded date of the deed in lieu of foreclosure and/or short sale with a minimum 5% down payment.

Mortgage Part of Chapter 7 Bankruptcy

Fannie Mae and Freddie Mac have a unique mortgage guideline when a borrower has had a mortgage part of their Chapter 7 Bankruptcy:

  • If a person had a mortgage part of their Chapter 7 Bankruptcy, the waiting period to qualify for a conventional loan is 4 year from the discharged date of their Chapter 7 Bankruptcy discharged date
  • The mortgage cannot be reaffirmed

Mortgage Options After Foreclosure and Bankruptcy on Conventional Loans

The housing event needs to have been finalized after Chapter 7 Bankruptcy by either of the following:

  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale

Government Loans Guidelines on Mortgage After Foreclosure and Bankruptcy

Government Loans Guidelines on Mortgage After Foreclosure and Bankruptcy

With government loans, the following applies:

  • With FHA, VA, and USDA loans, if a person had a mortgage part of their Chapter 7 Bankruptcy, the waiting period starts when the housing event has been finalized
  • The discharged date of the Chapter 7 Bankruptcy does not matter
  • The waiting period start date will be the recorded date of the foreclosure, deed in lieu of foreclosure, or short sale

Apply For Home Loans With Mortgage Broker With Best Mortgage Options After Foreclosure and Bankruptcy

Mortgage Borrowers who need to qualify with a mortgage broker who has the best mortgage options after foreclosure and bankruptcy, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. GCA Mortgage are mortgage brokers licensed in 48 states including Washington DC and Puerto Rico. We have over 170 wholesale lenders and can offer the best mortgage options after foreclosure and bankruptcy.