Qualifying For Mortgage After Short Sale And Deed In Lieu Of Foreclosure

This BLOG On Qualifying For Mortgage After Short Sale And Deed In Lieu Of Foreclosure Was UPDATED On October 11th, 2017

How to qualify for mortgage after Short Sale and deed in lieu of foreclosure:

  • Home Buyers can qualify for a mortgage after short sale and deed in lieu of foreclosure.
  • There are mandatory waiting periods to qualify for mortgage after short sale and deed in lieu of foreclosure.
  • Waiting period depends on the loan programs.
  • However, The Gustan Cho Team at USA Mortgage launched NON-QM Loans where there is no waiting period after short sale and deed in lieu of foreclosure to qualify for mortgage loan.
  • There is no waiting period after a standard foreclosure with NON-QM Loans, however, there is a one year mandatory waiting period after Chapter 7 Bankruptcy.

Qualifying For FHA Loans After Short Sale And Deed In Lieu Of Foreclosure

Mortgage Borrowers are eligible for FHA insured mortgage after short sale and deed in lieu of foreclosure as well as foreclosure if they meet the following:

  • 3 year waiting period after short sale date of prior home which is reflected on the HUD-1 Settlement Statement
  • 3 year waiting period after the recorded date of deed in lieu of foreclosure and/or foreclosure reflect on county recorder’s of deeds office
  • The waiting period does not start until the deed of the property has been transferred out of the name of the homeowner and into the lenders name or other name or date of sheriff’s sale
  • There is no waiting period after a short sale if the borrower has been timely with all of their mortgage payments as well as other credit payments up to the date of the short sale and been timely for the past 12 months

Two Year Waiting Period On Conventional Loans With 20% Down Payment After Short Sale And Deed In Lieu Of Foreclosure

The two year waiting period after short sale and deed in lieu of foreclosure with 20% down payment to qualify for conventional loans is no longer in effect. This section will remain posted for archival purposes:

For those who have had a prior short sale or a deed in lieu of foreclosure, they can qualify for a conventional mortgage loan with the following conditions:

  • 2 years from the recorded date of the deed in lieu of foreclosure or after 2 years from the date of the short sale HUD Settlement statement only if they have a 20% down payment. 
  • There cannot be any late payment histories since the deed in lieu of foreclosure and./or short sale and they need to show re-established credit.

Again The Above Conventional Guidelines After Short Sale And Deed In Lieu of Foreclosure no longer exists. New waiting period Conventional Guidelines has been implemented and launched

2017 Update On Conventional Loan After Short Sale And Deed In Lieu Of Foreclosure

Unfortunately, the two year waiting period to qualify for a conventional loan after short sale and deed in lieu of foreclosure with 20% down payment no longer is in effect with Fannie Mae and Freddie Mac as of August 2014.

  • The new waiting period to qualify for conventional loans after short sale and deed in lieu of foreclosure is 4 years from the short sale date and/or the recorded date of the deed in lieu of foreclosure.
  • Minimum of 5% down payment and re-established credit with a minimum credit score of 5% down payment.
  • Waiting period to qualify for conventional loan after a standard foreclosure is 7 years
  • 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 loans after Chapter 13 Bankruptcy discharged date
  • There is a four year waiting period to qualify for conventional loans after Chapter 13 Bankruptcy dismissal date

Fannie Mae Guidelines On Mortgage Part Of Chapter 7 Bankruptcy

There are instances where borrowers may qualify for conventional loans but not FHA, VA, USDA loans if they have mortgage part of Chapter 7 Bankruptcy.

  • Borrowers with mortgage or mortgages part of their Chapter 7 Bankruptcy can qualify for conventional loans in 4 years from the discharged date of the Chapter 7 Bankruptcy discharged date even though the foreclosure, deed in lieu, or short sale has been recorded after the discharged date.
  • This rule only applies on conventional loans.
  • With government loans, the waiting period clock does not start until the recorded date of the foreclosure, deed in lieu, or short sale date.
  • The mortgage cannot be reaffirmed and the housing event needs to be finalized.

Borrowers who need to qualify for a mortgage with a lender with no lender overlays on government and conventional loans can contact The Gustan Cho Team at USA Mortgage at 1-800-900-8569 or text us at 262-716-8151 for faster response. We are available 7 days a week, evenings, weekends, and holidays.

Gustan Cho NMLS ID # 873293

Related> Conventional Loan After Short Sale

Related> Waiting Period After Bankruptcy And Foreclosure

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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