Qualifying For FHA Loan After Foreclosure And Short Sale

This BLOG On Qualifying For FHA Loan After Foreclosure And Short Sale Was UPDATED And PUBLISHED On May 20th, 2020

Qualifying For FHA Loan After Foreclosure

Qualifying For FHA Loan After Foreclosure is now possible for home buyers who meets the mandatory waiting period after foreclosure.

  • Fannie Mae and Freddie Mac are the two mortgage giants that are in charge for setting standards and lending guidelines on Conventional Loans
  • Fannie Mae and Freddie Mac categorizes 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 a 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

In this article, we will discuss and cover Qualifying For FHA Loan After Foreclosure And Short Sale.

Foreclosure Versus Deed In Lieu Of Foreclosure

However, FHA classifies foreclosures and deed 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 homeowners 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

How to qualify for an FHA loan after being excluded repeatedly

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 sub prime mortgages were the name 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
  • Home buyers 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 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 a FHA Loan.

  • Qualifying for FHA Loan after foreclosure requires a mandatory waiting period of three years from the recorded date of foreclosure
  • The date need 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 on 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 a FHA loan on or after 2/15/2016

Qualifying For FHA Loan After Foreclosure With Late Payments

How to qualify for an FHA loan after exclusion 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 home buyers 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. Home buyers 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 gcho@gustancho.com. I will be able to help in getting a FHA Loan with no overlays.

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