Mortgage Waiting Period After Bankruptcy For Homebuyers

Gustan Cho Associates are mortgage brokers licensed in 48 states


In this article, we will cover and discuss the mortgage waiting period after bankruptcy and foreclosure on government, conventional, jumbo, and non-QM loans. There are mandatory waiting periods for mortgage loan borrowers to qualify for government and conventional loans after filing for Chapter 7 Bankruptcy. To qualify for an FHA loan and VA loan, there is a mandatory two-year waiting period after the discharge of a bankruptcy. There is a four-year seasoning waiting period for conventional loans. Homebuyers who have recovered sooner than others after bankruptcy do not have to worry about the mortgage waiting period after bankruptcy and/or foreclosure for homebuyers with non-QM loans.

Non-QM Mortgage With No Mortgage Waiting Period After Bankruptcy Requirements

There are no mortgage waiting period after bankruptcy requirements on non-QM loans one day out of bankruptcy and foreclosure. However, a 30% down payment is required. During a booming housing market like we are experiencing today, waiting out the waiting period to buy a house can cost you an opportunity to buy a house.

Non-QM Mortgages One Day After Bankruptcy With No Waiting Period

The great news is Gustan Cho Associates has non-QM mortgages one day after bankruptcy with no waiting period requirements. If the bankruptcy has been discharged less than two years, it is possible to obtain a home loan with non-QM loans. NON-QM Loans have no waiting period requirements after bankruptcy and/or foreclosure. However, non-QM loans require at least a 20% or larger down payment on a home purchase. USDA Rural Development mortgage loans normally have a mandatory three-year wait after a discharge of a bankruptcy.

Can I Qualify For a Mortgage During or After Chapter 13 Bankruptcy

Homebuyers can qualify for an FHA and/or VA loan during Chapter 13 Bankruptcy repayment plan one year into the repayment plan. A Chapter 13 bankruptcy is a form of bankruptcy where the debtor asks the court for a repayment plan set up within a period of 3 to 5 years. Chapter 13 bankruptcy shows that the debtor is willing to pay creditors at a reduced monthly amount over a period of time. FHA and VA will allow borrowers to purchase a home one year into a Chapter 13 Bankruptcy repayment plan with Trustee Approval. Timely payments during the repayment plan inside and outside Chapter 13 are mandatory. Needs to be a manual underwrite.

FHA and VA Loans After Chapter 13 Bankruptcy Mortgage Guidelines

There is no waiting period to qualify for FHA or VA Loans from the date of the discharge date of the Chapter 13 Bankruptcy. All payments need to be on time during and after the Chapter 13 Bankruptcy. If the Chapter 13 Bankruptcy discharge is less than two years seasoned, the file needs to be a manual underwrite. For conventional loans, the borrower can qualify for a conventional loan after 2 years of the discharge date of the Chapter 13 bankruptcy. Can qualify for conventional loans after 4 years of the dismissal date of Chapter 13. There is a waiting period of 3 years after the dismissal of Chapter 13 for USDA Rural Development mortgage loans.

How Long After a Housing Event Can I Qualify For a Conventional Loan?

There is no mortgage waiting period after bankruptcy and foreclosure with non-QM home loans one day out of foreclosure and bankruptcy with a 30% down payment. Fannie Mae and/or Freddie Mac classify a deed in lieu of foreclosure and short sale differently than a standard foreclosure. Mortgage Waiting Period After Bankruptcy And Foreclosure is different for short sale and deed in lieu of foreclosure then it is for regular foreclosure.

Fannie Mae Guidelines on Mortgage After a Housing Event Waiting Period Requirements

Fannie Mae and/or Freddie Mac guidelines on qualifying for conventional loans after a standard foreclosure is a seven-year waiting period from the recorded date of the foreclosure. There is a minimum four-year waiting period for Conventional loans after a short sale and/or deed in lieu of foreclosure. The conventional borrower can put a 5% down payment and has strong re-established credit after the short sale and/or deed in lieu of foreclosure.

Can I Qualify For a Mortgage With Late Payments After Bankruptcy and Foreclosure?

Late payments after bankruptcy and/or foreclosure are not a good thing. Borrowers with late payments after bankruptcy and foreclosure are called second bad credit offenders and most lenders do not want anything to do with them. However, it is possible to get an approve/eligible per an automated underwriting system with late payments after bankruptcy and foreclosure. Many lenders have strict underwriting guidelines and overlays when it comes to granting a mortgage loan approval for borrowers after a deed in lieu of foreclosure and/or short sale. Most lenders have overlays.

What Are Common Overlays From Mortgage Lenders

Examples of lender overlays are higher credit scores, no late payments after the short sale, rental verification, minimum number of credit tradelines for a minimum of 12 to 24 months, reserves, and lower debt to income ratios. Conventional loans normally have a mandatory seven-year waiting period after the recorded date of a foreclosure for a mortgage loan borrower to qualify. The waiting period is 7 years after a foreclosure to qualify for conventional loans. Borrowers can qualify for a conventional loan after four years from the recorded date of the deed in lieu of foreclosure, short sale, and chapter 7 bankruptcy discharged date.

Mortgage Waiting Period After Bankruptcy And Foreclosure on VA Home Loans

VA Mortgage Waiting Period After Bankruptcy And Foreclosure

The U.S. Department of Veteran Affairs (VA) is the government agency in charge of VA Loans. There is a two-year mandatory waiting period after a short sale, deed in lieu of foreclosure, and foreclosure to qualify for VA Loans. In the event, that the foreclosure was a prior VA mortgage loan, then the Veteran may not have the full entitlement available for the new VA mortgage loan.

VA Loans No Longer Has a Maximim Loan Limit

The borrower needs to check with their local VA office to see what amount of entitlement they qualify for. Gustan Cho Associates has no overlays on VA Loans. VA does not have minimum credit score requirements or debt-to-income ratio caps. Gustan Cho Associates has no lender overlays on VA home loans. We have no debt-to-income ratio overlays. We just go off findings of the Automated Underwriting System

Mortgage Waiting Period After Bankruptcy And Foreclosure on FHA Home Loans

FHA treats a foreclosure and/or deed in lieu of foreclosure the same. FHA has a mandatory 3-year waiting period from the recorded date of the foreclosure or deed in lieu of foreclosure before a mortgage loan borrower can qualify for a mortgage loan. Borrowers can qualify for 3.5% down payment FHA Loans with 580 credit scores. Gustan Cho Associates does not have any lender overlays on government and conventional loans.

Mortgage Guidelines Where There is No Waiting Period After Short Sale

No Waiting Period After Short Sale

There is no waiting period after a short sale to qualify for FHA Loans if the borrower was timely on all of their mortgage payments up to date of the short sale. FHA does not have a mandatory waiting period after a short sale if and only if the homeowner has been timely with all of their mortgage payment prior to the short sale. The proceeds of the short sale were used to serve as payment in full with the agreed price of the short sale. The homeowner is also required to have been current with all of his or her monthly credit obligations for the prior 12 months of the short sale. HUD, the parent of HUD, will not allow borrowers to obtain a new mortgage after a short sale if the borrower is taking advantage of a declining market or is purchasing a similar or superior property at a reduced price within commuting distance

USDA Mortgage Waiting Period After Bankruptcy And Foreclosure

USDA Guidelines on Mortgage Waiting Period After Bankruptcy And Foreclosure are the same as those of HUD Guidelines. USDA Rural Development normally has a three-year mandatory waiting period after a short sale in order for the mortgage loan borrower to qualify for a USDA Rural Development mortgage loan. USDA Rural Development mortgage loans have a mandatory three-year waiting period after foreclosure and/or deed in lieu of foreclosure and short sale. No late payments after bankruptcy and/or foreclosure. Re-Established credit after bankruptcy and/or foreclosure.

UPDATE: The FHA Back To Work Due To An Extenuating Event Mortgage Program no longer exists and has been discontinued.  Gustan Cho Associates will leave the FHA Back To Work Blogs published for its archives.

A NEW ONE-YEAR WAITING PERIOD AFTER A BANKRUPTCY AND/OR FORECLOSURE IS TO BE EFFECTIVE ON AUGUST 15, 2013

Effective August 15, 2013, the new waiting period after a bankruptcy and/or foreclosure will be one year under the FHA Back To Work Extenuating Circumstances Due To An Economic Event Mortgage Program. However, many mortgage lenders will have overlays and since this is a new concept, I will keep you posted as to what overlays the various lenders will implement. The one-year waiting period to qualify for a mortgage loan after a bankruptcy and/or short sale will open up many doors to millions of Americans. Not everyone who has filed for bankruptcy or had a short sale a year ago will qualify but many others will qualify for this new program.

The FHA Back To Work Program has been discontinued and is no longer available. However, Gustan Cho Associates offers non-QM loans one day out of bankruptcy and foreclosure with a 30% down payment on a home purchase. GCA Mortgage Group is one of the very few mortgage lenders that offer non-QM mortgages one day out of bankruptcy and foreclosure.

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