Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage

This BLOG On Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage Was UPDATED On November 14th, 2017

Every mortgage loan program has Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage.

  • The only No Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage are NON-QM Loans and Investment Property Loans
  • However, NON-QM Loans require 20% down payment and have higher mortgage interest rates

The Gustan Cho Team at USA Mortgage offers the following where there is no Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage:

  • NON-QM Loans: No waiting period after foreclosure, deed in lieu of foreclosure, short sale
  • NON-QM Loans: One year waiting period after Chapter 7 Bankruptcy discharged date
  • Bank Statement Loans For Self Employed Borrowers where no tax returns are required and income is calculated by averaging 24 months of either business or personal bank statements

Almost all mortgage loan programs have Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage with the exception of NON-QM Loans.

Great Recession Of 2008 And The Housing Collapse

The real estate and mortgage meltdown of 2008 has struck this country and the world like a category 5 hurricane. Countless of families lost their home to foreclosure, deed in lieu of foreclosure, short sale. New banking rules and regulations were created. Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage were created for all mortgage loan programs and implemented.

  • The Great Recession has caused the massive depreciation of real estate market values as well as massive layoffs
  • Company shutdowns have resulted in many homeowners and American workers have their own financial crisis
  • Never in history has a recession affected so many Americans
  • Bankruptcies were filed left and right
  • Every American family knows of friends and family who have filed bankruptcy or have fell behind on their monthly payments where it really affected their financial being
  • Others have lost their homes via foreclosure, deed in lieu of foreclosure, or short sale

Those who are one of those Americans who fell victim to the real estate and credit meltdown of 2008 may be wondering when they can ever become homeowners again.  I will cover on this mortgage blog post what the federal guidelines and the Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage.

Conventional Loan Waiting Period After Short Sale And Deed In Lieu Of Foreclosure To Qualify For Mortgage

Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage rules and regulations were created and implemented.

  • People who had deed in lieu of foreclosure and short sales had to meet the waiting period requirements as well
  • A short-sale, also known as a pre-foreclosure real estate sale, is the sale of a residential property in lieu of a foreclosure which results in a mortgage payoff that is less than the original amount owed or the current balance which is approved by the mortgage lender

To qualify for a conventional mortgage loan after a homeowner had a prior short-sale and/or deed in lieu of foreclosure, the following waiting period guidelines by Fannie Mae will apply.

  • Four year waiting period for a mortgage loan
  • Maximum LTV, also known as loan to value, of 95%
  • What this means is that the home buyer needs to put 5% down payment.
  • There is a 7 year waiting period for a conventional mortgage loans after the recorded date of a standard foreclosure

Fannie Mae and Freddie Mac are the two mortgage giants that sets the mortgage guidelines for conventional loans. Fannie and Freddie has different Waiting Period Requirements after Short Sale and Deed In Lieu Of Foreclosure versus standard foreclosure.

Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage On FHA Loans

Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage on FHA Loans are the following:

  • 2 Year Waiting Period After Chapter 7 Bankruptcy discharged date
  • Borrowers can qualify for FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan
  • There is no waiting period requirements to qualify for FHA Loans after a Chapter 13 Bankruptcy discharged date
  • 3 Year Waiting Period to qualify for FHA Loans after the recorded date and/or sheriff’s sale date of deed in lieu of foreclosure and/or foreclosure
  • 3 Year Waiting Period to qualify for FHA Loans after a short sale

Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage On VA Loans

VA Loans have shorter Waiting Period After Bankruptcy And Foreclosure To Qualify For Mortgage.

  • 2 year waiting period after Chapter 7 Bankruptcy discharged date to qualify for VA Loans
  • Veteran borrowers can qualify for VA Loans one year into a Chapter 13 Bankruptcy repayment period
  • There is no waiting period after Chapter 13 Bankruptcy discharged date
  • 2 year mandatory waiting period after a prior short-sale for a home buyer to qualify for a VA mortgage loan
  • 2 year waiting period after recorded date and/or sheriff’s sale of foreclosure and/or deed in lieu of foreclosure

Qualification Requirements For Conventional Loans After Bankruptcy

Here are the Fannie Mae and Freddie Mac Guidelines to qualify for conventional loans after bankruptcy:

  • The qualification requirements to apply for a conventional mortgage loan after Chapter 7 bankruptcy discharged date is 4 years
  • For a Chapter 13 bankruptcy filing, the mandatory waiting period is 24 months from the filing date and 48 months from the dismissal date of the Chapter 13 bankruptcy.

The qualification requirement to qualify for a FHA insured mortgage loan after the homeowner files a Chapter 13 bankruptcy is the following:

  • Borrower needs to document at minimum of at least one year into the planned bankruptcy payment plan has passed
  • Provide documentation that all payment plans to the creditors have been made on time without any late payments
  • In the event if the mortgage loan borrower is still in a Chapter 13 repayment plan, the mortgage loan borrower needs to get permission by the courts in order to enter in a new mortgage
  • In the event if the mortgage loan borrower is still in a repayment plan on his or her Chapter 13, the overall monthly repayment amount will be included in qualifying for the borrower’s overall debt to income ratios

The qualification requirements to obtain a VA loan after a prior bankruptcy filing, the mandatory waiting period is two years from the discharge date of the bankruptcy.  The qualification requirement for a mortgage borrower who has filed a prior Chapter 13 bankruptcy, the mortgage loan borrower needs a one year payment plan and all monthly payments needed to be paid on time.  The permission of the courts granting approval in the borrower entering into a new residential mortgage loan is mandatory as well.

2017 Update On Qualifying For Conventional Loan After Deed In Lieu And Short Sale

New Fannie Mae Guidelines came effective last August 15, 2015 on qualifying for a conventional loan after a deed in lieu of foreclosure and short sale.  The two year waiting period to qualify for a conventional loan after deed in lieu of foreclosure and short sale with 20% down payment no longer is effective.  New guidelines to qualify for a conventional loan after deed in lieu of foreclosure and short sale is 4 years from the recorded date of the deed in lieu of foreclosure and/or short sale with a minimum 5% down payment.

Mortgage Part Of Chapter 7 Bankruptcy

Fannie Mae and Freddie Mac has a unique mortgage guideline when a borrower has had a mortgage part of their Chapter 7 Bankruptcy:

  • If a person had a mortgage part of their Chapter 7 Bankruptcy, the waiting period to qualify for a conventional loan is 4 year from the discharged date of their Chapter 7 Bankruptcy discharged date
  • The mortgage cannot be reaffirmed
  • The housing event needs to have been finalized after the Chapter 7 Bankruptcy by either of the following:
    • Foreclosure
    • Deed In Lieu Of Foreclosure
    • Short Sale

With government loans the following applies:

  • With FHA, VA, USDA Loans, if a person had a mortgage part of their Chapter 7 Bankruptcy, the waiting period starts when the housing event has been finalized
  • The discharged date of the Chapter 7 Bankruptcy does not matter
  • The waiting period start date will be the recorded date of the foreclosure, deed in lieu of foreclosure, or short sale

Mortgage Borrowers who need to qualify with a direct lender with no lender overlays, please contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays.

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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