Waiting Period To Qualify For A Mortgage Loan After Foreclosure

This BLOG On Waiting Period To Qualify For A Mortgage Loan After Foreclosure Was UPDATED On December 8th, 2018

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 and/or bankruptcy.

• 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
• 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

The waiting period start date is the date of the County Sheriff’s Sale :

• or the date the deed was transferred out of borrowers name
• and not the date the homeowner turned the keys in or the date they vacated the property

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 For Co-signers On Foreclosed Mortgage

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 FHA Shorten Waiting Period To Qualify For Mortgage After Foreclosure?

There are rumors that FHA is thinking about reducing the waiting period or even eliminating it altogether for those who filed bankruptcy and/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 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
• 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

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 With 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 and/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.