This guide cover the waiting period to qualify for a mortgage loan after foreclosure. Homeowners who had a prior foreclosure and are ready to purchase another home have to meet the waiting period to qualify for government and conventional loans. FHA loans and Conventional loans are the most popular loan programs in the U.S. Gustan Cho Associates now offer non-QM loans. NON-QM Loans have no waiting period requirements after foreclosure or bankruptcy.
The waiting period start date after a foreclosure, deed-in-lieu of foreclosure, or short sale is the date of the County Sheriff’s Sale or the date the deed was transferred out of borrowers name.
The waiting period start date after a housing event is not the date the homeowner turned the keys in or the date they vacated the property. With VA loans, the waiting period is 2 years after foreclosure, DIL, short sale. With Conventional loans, there is a 7-year waiting period after the recorded date of foreclosure and four-year waiting period after a deed-in-lieu of foreclosure and short sale.
When Is The Start of The Waiting Period To Qualify For a Mortgage
The waiting period start date is important. This is because there are thousands of folks who have turned in the keys several years ago but the deed is still in their names so the waiting period clock did start for those folks. Banks are in no hurry to transfer the deed to their names.
Waiting Period To Qualify For a Mortgage After Foreclosure For Co-signers
People who were co-signers on a home loan and the house that they co-signed went into foreclosure, they also need to meet the waiting period to qualify for a mortgage loan after foreclosure. Even though you had no interest in the home or even saw or visited the home and all you did was help out the buyer of the property by co-signing, if the property got foreclosed on, you are not eligible until the three-year waiting period has elapsed. Remember that the 3 year waiting period clock starts ticking the day that the actual deed was transferred out of the borrowers’ name into the name of the lender or the date of the sheriff’s sale.
Will HUD Shorten Waiting Period To Qualify For a Mortgage After Foreclosure?
There are rumors that HUD is thinking about reducing the waiting period or even eliminating it altogether for those who filed bankruptcy or had foreclosures. Again, as of today, nothing is solid but just talk. I have never heard of any borrowers getting a waiting period waiver from any FHA lenders due to extenuating circumstances. The waiting period to qualify for a mortgage is pretty much non-negotiable.
For those who had a foreclosure, the wait time is 3 years and for those who filed bankruptcy, the wait time is 2 years from the date of the discharge of the bankruptcy on FHA and USDA loans.
There is a 3-year mandatory waiting period to qualify for FHA loans after the recorded date of foreclosure, deed-in-lieu of foreclosure, short sale. There is a 3-year waiting period to qualify for USDA loans after the recorded date of foreclosure, DIL, or short sale. VA loans is two years. Foreclosures stay on credit report for 7 years, Chapter 13 bankruptcies stay on your record for 7 years, and Chapter 7 bankruptcies stay on record for 10 years. Judgments stay on your credit report for 7 years.
Waiting Period To Qualify For a Mortgage on Government and Conventional Loans
The waiting period to qualify for a mortgage after foreclosure can vary depending on several factors, including the type of mortgage loan and the circumstances surrounding the foreclosure. The general waiting period to qualify for a mortgage after foreclosure and bankruptcy on government and conventional loans are the following:
Conventional Loans
Fannie Mae and Freddie Mac has a seven-year period to qualify for a mortgage after a foreclosure before you can qualify for a conventional loan. There is a four year waiting period to qualify for a mortgage after a deed-in-lieu of foreclosure or short sale to qualify for a convenional loan.
FHA Loans
HUD, the parent of FHA, has a three year waiting period to qualify for a mortgage after a foreclosure, deed-in-lieu of foreclosure, or short sale on FHA loans.
VA Loans
For veterans, the waiting period for a VA loan can be shorter. The Veterans Affairs has a two year waiting period to qualify for a mortgage after foreclosure, deed-in-lieu of foreclosure, or short sale for VA loans.
USDA Loans
The waiting period to qualify for a mortgage for a USDA loan is three years after a foreclosure. It’s important to note that these waiting periods can vary based on circumstances, such as the reason for the foreclosure and whether there were extenuating circumstances. Some lenders may also have requirements that could be more stringent than the standard guidelines. Additionally, they demonstrated a good credit history, stable income, and responsible financial behavior during the waiting period after foreclosure. It’s advisable to consult with a lender or financial advisor to understand your specific situation and options.
UPDATE on FHA Waiting Period To Qualify For a Mortgage After Foreclosure
This mortgage blog article has been updated since it was originally written and published. FHA introduced the FHA Back to Work Extenuating Circumstances due to an Economic Event on August 15, 2013. This loan program shortened the waiting period after a bankruptcy and/or foreclosure to one year after the economic event. Most lenders do not do the FHA Back To Work because the success rate is not too good. FHA Back To Work Mortgage has turned out to be a HUGE FLOP and got discontinued.
No Waiting Period After Foreclosure and Bankruptcy on Non-QM Loans
Banks statement mortgage loans For Self Employed Borrowers and NON-QM loans are back. Here is how NON-QM Loans work:
- 10% to 20% down payment
- Mortgage Rates depends on borrowers credit scores
- No private mortgage insurance required
- No loan limits on non-QM loans
- Mortgage interest rates are competitive but normally higher than traditional financing
- No waiting period to qualify for a mortgage loan after bankruptcy or foreclosure
- Income docs required with Bank Statement Mortgage Loans For Self Employed Borrowers
- 30 year fixed rate mortgages
Gustan Cho Associates offers bank statement loans for self-employed borrowers. No income tax is required. Borrowers’ income is averaged from 12 months of bank statement deposits. Homebuyers with prior bankruptcies or foreclosures who need to qualify for home loans, please contact us at 1-800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates are experts in helping borrowers to get mortgage approval with no waiting period to qualify for a mortgage with non-QM and alternative financing mortgage options.
