Qualifying For FHA Loan After Foreclosure

Qualifying For FHA Loan After Foreclosure is now possible for homebuyers who meet the mandatory waiting period after foreclosure. Fannie Mae and Freddie Mac are the two mortgage giants that are in charge of setting standards and lending guidelines on Conventional loans. Fannie Mae and Freddie Mac categorize foreclosure and deed in lieu of foreclosure into two separate categories and the waiting period differs between the two. The mandatory waiting period to qualify for a conventional loan after the recorded date of foreclosure is seven years. The mandatory waiting period to qualify for a conventional loan after the recorded date of a deed in lieu of foreclosure is four years.

Foreclosure Versus Deed In Lieu Of Foreclosure

However, HUD, the parent of FHA, classifies foreclosures and deeds in lieu of foreclosures into the same category: The mandatory waiting period in qualifying for FHA Loan after foreclosure is three years from the recorded date of the foreclosure. The waiting period start date is reflected by the date of the sheriff’s sale or when the deed of the property was transferred out of the homeowner’s name. Needs to be transferred into the name of the lender. The housing event needs to be recorded on public records. The mandatory waiting period in qualifying for FHA Loan after a deed in lieu of foreclosure is the same as the waiting period after foreclosure, which is three years.

Qualifying For FHA Loan After Multiple Foreclosures

Many folks invested in real estate prior to the 2008 real estate and mortgage meltdown. Real estate values were escalating and appreciating double digits year after year. The real estate market was hot and lending was easy. No doc loans and subprime mortgages were the names of the game and it was very difficult not to make money investing in real estate. Then the big real estate crash came like a major hurricane in 2008. Hundreds of thousands, if not millions, of real estate investors, not just lost their real estate investment portfolio but also ended up losing their personal homes. There are so many folks who have multiple foreclosures. I have many borrowers who are looking to become homeowners again but have multiple foreclosures. Homebuyers can qualify for FHA Loans after multiple foreclosures. How this works is the waiting period applies to all foreclosures. Whether it is one property or ten properties that a person had in the past, it does not matter. FHA will go off the last foreclosure that was recorded.

Case Scenario On Waiting Period Start Date

For example, here is a case scenario where the borrower had three properties, and here are when these properties foreclosed:

  1. Property A foreclosure on 2/13/2010
  2. Property B foreclosure on 2/14/2011
  3. Property C foreclosure on 2/15/2013

The above borrower had three foreclosures and needs to qualify for an FHA loan. Qualifying for FHA loan after foreclosure requires a mandatory waiting period of three years from the recorded date of foreclosure. The date needs to be reflected and recorded on public records. With the above example, the latest foreclosure recorded was with Property C which the recorded date was 2/15/2013. Property A and Property B already met the 3-year mandatory waiting period. Property C, the waiting period is over on 2/15/2016.  This person will qualify for an FHA loan on or after 2/15/2016.

Can I Qualify For An FHA Loan After Foreclosure With Late Payments

Lenders do not want to see any late payments by borrowers after foreclosure and/or short sale. Late payments after foreclosure and/or short sale is not a deal killer but most lenders will not approve borrowers on FHA Loan After Foreclosure with late payments. I can help homebuyers who had late payments after foreclosure. One of two late payments is not an issue. However, with a series of late payments after foreclosure, borrowers may need to go to a lender with no overlays like Gustan Cho Associates. Homebuyers with late payments after foreclosure, and/or short sale 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 will be able to help in getting an FHA loan with no overlays. 

FHA Loan Waiting Period Requirements After Foreclosure and Bankruptcy

Homebuyers can qualify for FHA Loan After Bankruptcy And Foreclosure after meeting the mandatory waiting period.

Homebuyers can qualify for FHA Loan After Bankruptcy And Foreclosure after meeting the mandatory waiting period. All government loans and conventional loan programs have a minimum waiting period after bankruptcy and foreclosure. For consumers who have filed for bankruptcy and/or had a foreclosure, the chances are that their credit scores have suffered. A bankruptcy or foreclosure can plummet someone’s credit score by more than 150 points. The good news with filing bankruptcy, consumers can have a fresh financial start in life and can start rebuilding their credit. Same as with a  foreclosure. Lenders do not go after the deficiency on a foreclosure on owner occupant residences. Consumers can become homeowners again after bankruptcy and foreclosure. Homebuyers can qualify for FHA Loan after Bankruptcy and Foreclosure by meeting the HUD Guidelines on the waiting period after Bankruptcy and Foreclosure.

In the following paragraphs, we will cover and discuss FHA Guidelines after Bankruptcy and Foreclosure.

Credit After Bankruptcy And Foreclosure

A person’s credit score will automatically improve as time passes after filing bankruptcy even if they do not establish new credit. Bankruptcy and foreclosure can plummet credit scores by 150 points or more. This drop-in credit score is not permanent. Scores will slowly increase as bankruptcy and foreclosure age. This holds true even if consumers do nothing about improving their credit scores. Many who file for bankruptcy or go through a foreclosure does not want to do anything with getting new credit.

Importance Of Re-Establishing Credit After Bankruptcy And Foreclosure

However, not getting new credit after bankruptcy and/or foreclosure can affect the chances of qualifying for an FHA loan after bankruptcy and foreclosure. Lenders want to see re-established credit after bankruptcy and foreclosure by borrowers. Easiest and fastest way of rebuilding credit to qualify for an FHA loan after bankruptcy and foreclosure are to get three secured credit cards with $500 credit limits. Any credit limit under $500 on secured credit cards will have very little effect on improving credit scores. Most lenders will not approve borrowers for FHA loans after bankruptcy and foreclosure if they had any late payments after bankruptcy, deed in lieu of foreclosure, foreclosure, short sale.

How To Qualify For FHA Loan After Bankruptcy And Foreclosure

There is a two year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for FHA loans

Here are HUD Guidelines On Qualifying For FHA Loans After Bankruptcy And Foreclosure:

  • There is a two year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for FHA loans
  • Homebuyers one year into a Chapter 13 Bankruptcy repayment plan can qualify for FHA loans
  • This holds true as long as they made 12 timely payments to their creditors and get approval from Chapter 13 Bankruptcy Trustee
  • There is no waiting period after the Chapter 13 Bankruptcy discharged date to qualify for FHA Loans
  • There is no waiting period to qualify for an FHA loan after a Chapter 13 Bankruptcy dismissal date
  • There is a three-year waiting period to qualify for FHA loans after the recorded date of foreclosure, deed in lieu of foreclosure, short sale

There is no waiting period to qualify for FHA Loan With Timeshare Foreclosure. Timeshares are considered consumer loans under the eyes of HUD. Borrowers who had a mortgage part of Chapter 7 Bankruptcy and the mortgage has been discharged in the Chapter 7 Bankruptcy, there is a three-year period after the deed of transfer has taken place after the Chapter 7 Bankruptcy to qualify for FHA loans.

Fannie Mae Guidelines On Foreclosures

With Fannie Mae and Freddie Mac, borrowers who had mortgage part of Chapter 7 Bankruptcy can qualify four years from the discharged date of the Chapter 7 Bankruptcy. The transfer of deed date does not matter and can happen after the discharged date. As long as the deed transfer has taken place, borrowers can qualify for Conventional Loans four years from the discharged date of the Chapter 7 Bankruptcy. Homebuyers who need to qualify for FHA Loan After Bankruptcy And Foreclosure can contact us at Gustan Cho Associates at 262-716-8151 text us for faster response. Or email us at [email protected] We are available 7 days a week, evenings, weekends, and holidays.

Leave a comment