After a bankruptcy, foreclosure, short sale or loan modification, how long must prospective home buyers wait before obtaining credit for a conventional home loan, USDA loan, FHA loan or VA loan? Mortgage Broker Fatemeh Carter reviews wait time requirements for each type of mortgage.

Conventional

Chapter 7 and chapter 11 Bankruptcy: 4 years from discharge or dismissal date. If there are extenuating circumstances, then 2 years.

Chapter 13 bankruptcy: 2 years from discharge date or 4 years from dismissal date. If there are extenuating circumstances, then 2 years from discharge date or 2 years from dismissal date.

Foreclosure: 7 years from completion date. Three years for extenuating circumstances. Additional requirements after 3 years up to 7 years: a. lesser of 90% LTV or max LTV/CLTV matrix b. purchase: owner occupied only c. Rate/term: all occupancies.

Deed-in-lieu of foreclosure, pre-foreclosure, short sale: 4 years, or 2 years with extenuating circumstances

 

USDA

Chapter 7 Bankruptcy: 3 years from discharge or dismissal date

Chapter 13 Bankruptcy: if more than 12 months and less than 24 months, discharged with pay history from the trustee. Two years discharged ok. One year of the payout must have elapsed and payments made on time. Borrower must receive permission from the courts to enter into a mortgage.

Foreclosure, deed-in-lieu of foreclosure, short sale, or modification: three years from completion date if the borrower has a 640 or greater credit score, a lesser wait period may be acceptable.

 

FHA

Chapter 7 bankruptcy: two years from discharge date or 1 to 2 years for extenuating circumstances

Chapter 13 bankruptcy: more than 1 year and less than 2 years discharged with pay history from the trustee. Two years discharged ok. One year of the payout must have elapsed and payments made on time. Borrower must receive permission from the courts to enter into a mortgage. High balance is 7 years.

Foreclosure, deed-in-lieu of foreclosure, pre-foreclosure: Three years from completion date, high balance foreclosure is not allowed within the most recent 7 years.

Short sales: three years from completion date

 

VA

CHAPTER 7 BK: two years from discharge or dismissal date

Chapter 13 bk: documentation of the debt restructure required. Acceptable 12 month payment history of the debts included in the bankruptcy. Documentation of the court’s permission to proceed. Any additional requirements per AUS.

Foreclosure, deed-in-lieu of foreclosure, short sale, or modification: three years from completion date.