Waiting Period After Bankruptcy And Foreclosure Mortgage Guidelines

This Article Is About Waiting Period After Bankruptcy And Foreclosure Mortgage Guidelines

There is a mandatory waiting period after bankruptcy and foreclosure to qualify for a residential mortgage loan.

  • If you had a prior bankruptcy, there is a mandatory two year waiting period after the discharge date of your bankruptcy to qualify for a residential FHA mortgage loan
  • There is a three year mandatory waiting period after the recorded date of a foreclosure and/or deed in lieu of foreclosure to qualify for an FHA loan
  • There is a three year waiting period after a short sale to qualify for a residential mortgage loan
  • The waiting period time clock starts from the short sale date reflected on the HUD’s settlement statement

Can I Get Mortgage Approval Prior To My Mandatory Waiting Period After Bankruptcy And Foreclosure?Can I Get Mortgage Approval Prior To My Mandatory Waiting Period After Bankruptcy And Foreclosure?

Two to three years is a very long time to wait to qualify for a mortgage loan after a bankruptcy and/or foreclosure.

  • Many home buyers cannot get a straight answer when they ask a lender whether they can get a mortgage approval prior to their anniversary date of the waiting period after bankruptcy and foreclosure
  • This answer depends on the lender
  • Many banks and credit unions will not accept a mortgage application until the two or three year waiting period after bankruptcy and foreclosure have been passed
  • However, there are residential mortgage lenders that will accept your mortgage application prior to the two or three-year waiting period
  • However, it needs to be close to the 2 or 3 year waiting period
  • Your mortgage loan application will be processed and underwritten and the underwriter will issue you a loan approval
  • However, YOU CANNOT CLOSE ON YOUR MORTGAGE LOAN UNTIL THE 2 OR 3 YEAR MANDATORY WAITING PERIOD has passed

Or borrowers can qualify for Non-QM Loans where there are no waiting period requirements after bankruptcy and/or housing event.

Home Buyers Who Are Close Of Meeting Waiting Period After Bankruptcy And Foreclosure

If you are reaching your two to three year mandatory waiting period and you are a home buyer and like to start shopping for a home, consult a loan officer.

  • See if they can process and underwrite your file prior to the 2 or 3 year anniversary of your mandatory waiting period
  • If you get the thumbs up from the mortgage broker, he or she can issue you a pre-approval letter and you can start shopping for a new home
  • Make sure that you do not set a closing date until after the 2 or 3 year mandatory waiting period
  • Once you get a signed real estate purchase contract, your lender can start processing and underwriting and get loan approval

Underwriters can condition that you cannot close until after the mandatory waiting period after bankruptcy and foreclosure has passed.

Non-QM MortgagesNon-QM Mortgages

Non-QM Mortgages do not have any waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. However, 10% to 20% down payment is required. The down payment requirements are dependent on the borrower’s credit scores. Non-QM Mortgage rates are higher than government and conventional loans. However, there is no private mortgage insurance on Non-QM Loans. There are no maximum loan limits on Non-QM Mortgages. Self-Employed Borrowers can qualify for our bank statement mortgage program for self-employed borrowers. No Income Tax Returns are required. Borrowers who had late payments in the past 12 months can qualify for Non-QM Loans. For more information on this topic and/or other mortgage-related topics, 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.

2 Comments
  1. Shelley Fryman

    Good Monday to you all!

    I just wanted to take a moment to introduce myself as your AE and contact of record! I’m thrilled to be a part of the Newfi Team and wanted you to have my contact information for future reference.

    Should you have any need and wish to discuss a new loan, please reach out to me as I’m happy to help!

    Have a great rest of your day and terrific week!

    Cheers!
    Shelley Fryman
    Account Executive | Newfi Lending
    c: 312-524-6424 | shelley@newfi.com
    2200 Powell Street, #340, Emeryville, CA 94608

  2. Victor Panalli says

    546, 597, 568 – Fico (5, 4 and 2) as of 1/11/21
    Debt payments: 393.00
    child support: 302.00
    income: VA disability 100% – $3624
    social security:$ 751.00 (gross)

    I have $6822 in savings right now, but plan to build on that a bit more over the next few months. Not sure what to do with that money? pay off debt? save it?

    My wife and I are currently in college and I get the GI Bill of 918 per month and she gets chapter 33 benefit of 1248 per month. She wont be on the loan bc of her bad credit history.

    Ive been retired from the Army since 2015.

    I have been working on clearing out debt and making on time payments. I have no student loans or auto payments.

    Please let me know what you can do for us. We are trying to find a home in or around Festus, Missouri. Large enough for a 5 person family.
    Thank you

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