Waiting Period For Mortgage After Bankruptcy And Foreclosure

This article covers Waiting Period For Mortgage After Bankruptcy And Foreclosure

What Are The Waiting Period For Mortgage After Bankruptcy And Foreclosure:

For home buyers with a prior bankruptcy and/or foreclosure, there is a mandatory waiting period for a mortgage after bankruptcy and foreclosure to qualify for traditional mortgage loans. Traditional mortgage loan programs are government and conventional loans. The waiting period differs depending on the loan program. With a prior Chapter 7 Bankruptcy, there is a mandatory two-year waiting period after the discharge date of Chapter 7 bankruptcy to qualify for VA and FHA Loans. USDA Loans require a three-year waiting period after Chapter 7 Bankruptcy. There is no waiting period to qualify for FHA and VA Loans after the Chapter 13 Bankruptcy discharged date. Borrowers can qualify for FHA Loans and VA Home Loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval. There is a three-year waiting period after foreclosure, a deed in lieu of foreclosure, a short sale on FHA and USDA loans. There is a two-year waiting period after foreclosure, a deed in lieu of foreclosure, short sale on VA loans.

Waiting Period For Mortgage After Bankruptcy And Foreclosure On Conventional Loans

There is a four-year waiting period to qualify for Conventional Loans after the Chapter 7 Bankruptcy discharged date. There is a two-year waiting period after the Chapter 13 Bankruptcy dismissal date to qualify for Conventional Loans. There is a four-year waiting period to qualify for Conventional Loans after the Chapter 13 Bankruptcy dismissal date. There is a four-year waiting period after a deed in lieu of foreclosure and/or short-sale to qualify for conventional loans. There is a seven-year waiting period after a regular foreclosure to qualify for a conventional loan. Lenders will not allow mortgage applicants to apply for mortgages until a mandatory waiting period has passed. Gustan Cho Associates has no waiting period after bankruptcy and/or foreclosure with a 30% down payment with non-QM loans.

In this article, we will discuss and cover qualifying for a mortgage after bankruptcy and foreclosure.

When Can I Apply For A Mortgage After Bankruptcy And Foreclosure

Once the mandatory waiting period has passed, then the lender will submit an application and credit report to either:

  • Fannie Mae’s DU Automated Underwriting System
  • and/or Freddie Mac’s LP Automated Underwriting System for an automated approval

If a mortgage application gets submitted prior to the end of the waiting, then the mortgage application will not get an automated approval per DU FINDING and/or LP FINDINGS. The actual waiting period needs to be met in order to get an approve/eligible per AUS.

Waiting Period For Mortgage After Bankruptcy And Foreclosure Or Deed In Lieu Of Foreclosure

There is a mandatory waiting period after the housing event to qualify for government and conventional loans. There is no waiting period to qualify for home loans after foreclosure, deed in lieu of foreclosure, short sale with our Non-QM Loans. There is a mandatory 3 year waiting period after the recorded date of a foreclosure or deed in lieu of foreclosure to qualify for an FHA and USDA Loans. There is a two-year waiting period to qualify for VA Loans after foreclosure, deed in lieu of foreclosure, short sale. There is a seven-year waiting period to qualify for Conventional Loans after regular foreclosure There is a four-year waiting period to qualify for Conventional Loans after a short sale and/or deed in lieu of foreclosure. Once a borrower has completed the three years mandatory waiting period after a foreclosure or a deed in lieu of foreclosure, borrowers should get an approve/eligible via either Fannie Mae’s Automated Underwriting System and/or Freddie Mac’s Automated Underwriting System on FHA and/or USDA Loans. The waiting period under the three years mandatory waiting period will not get approve/eligible per DU FINDINGS and/or LP FINDINGS. There is a three-year mandatory waiting period after the settlement date of the short sale to qualify for USDA and FHA insured mortgage loan. The waiting period is reduced to two years on VA Loans.

Can You Qualify For Mortgage Before The Waiting Period?

Homebuyers who have not met the mandatory waiting period after the housing event can qualify for a mortgage with our new non-QM loans. There is no waiting period after foreclosure, deed in lieu of foreclosure, short sale with non-QM loans.  Mortgage Rates are higher than government and conventional loans. 10% to 30% down payment is required. In general, there is no minimum credit score to qualify for non-QM loans. The down payment requirements depend on the risk the lender needs to take. For example, Gustan Cho Associates can do mortgages one day out of bankruptcy and/or foreclosure with a 30% down payment. After two years out of bankruptcy and/or foreclosure, a 20% versus a 30% down payment is required. The longer the bankruptcy and/or foreclosure has been seasoned and the borrower has reestablished their credit means the less risk the lender has.

Manual Underwrite

What is Manual Underwrite

Borrowers who cannot get an approved/eligible per Automated Underwriting System Findings and get refer/eligible per AUS needs to be downgraded to manual underwriting on VA Home Loans and FHA Loans:

  • There is a price adjustment for a manual underwrite which means a slightly higher interest rate
  • Verification Of Rent is required on manual underwriting
  • The maximum debt to income ratio is 50% DTI with compensating factors
  • Payment Shock of less than 5% is considered compensating factor
  • Income from the second job with one-year seasoning, but not quite two years and not used as qualified income is considered compensating factor
  • No late payments in the past 12 months on all manual underwriting
  • One month’s reserves of PITI required

All VA and FHA Home Loans during and after Chapter 13 Bankruptcy discharged with less than 2 years seasoning of discharged date are manual underwriting. All manual underwriting guidelines apply. Gustan Cho Associates is a national mortgage company with no overlays on government and conventional loans. Borrowers who need to qualify for government, conventional, non-QM loans can contact us at GCA Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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