Recently, I have had several people ask me "How long do I have to wait after a foreclosure or short sale before I can get a mortgage again to buy a home?"
Below is a helpful chart provided by Janice Wescott of Reliant Mortgage here in Maine.
The hit to your credit score from a foreclosure, deed in lieu, or short sale will vary depending upon your starting score and other factors. However, the time-lines below seem steady.
After Foreclosure/Short Sale/Bankruptcy Time Line
Conforming Loans
Chapter 7 Bankruptcy 48 months since discharged/dismissed Chapter 13 Bankruptcy 24 since discharge; 48 months since dismissed Borrowers with Multiple BK Filings 60 since most recent discharge/dismissal Foreclosure 84 months or more since completion Deed-in-Lieu 48-84 months (depends on property type, LTV, refi or purchase) Short Sale or Pre-foreclosure 24-84 months (depends on property type, LTV, refi or purchase)
FHA Chapter 7 Bankruptcy 24 months since discharge Chapter 13 Bankruptcy
12 months of the payout period has elapsed & permission from the counseling agency is granted to enter into a mortgage
Foreclosure 36 months since completion Deed-in-lieu 36 months since completion Short Sale or Pre-foreclosure
36 months if previous mortgage was delinquent (exceptions can made for extenuating circumstances)
12 month if no late mortgage or installment payments 12 months prior to short sale (subject property cannot be located in the same geographic area.
VA Chapter 7 Bankruptcy 24 months since discharge Chapter 13 Bankruptcy
12 months of the payout period has elapsed & permission from the counseling agency is granted to enter into a mortgage
Foreclosure If seasoned more than 36 months but less than 84 months minimum, max LTV is 90% If seasoned more than 84 months, standard down payment policies apply
If foreclosure is due to financial mismanagement, must seasoned at least 84 months
Deed-in-Lieu If Deed in Lieu is due to hardship, then: If seasoned more than 36 months but less than 84 months minimum, max LTV is 90% If seasoned more than 84 months, standard down payment policies apply If Deed in Lieu is due to financial mismanagement, then: If seasoned more than 48 months but less than 84 months minimum, max LTV is 90% If seasoned more than 84 months, standard down payment policies apply Short Sale or Preforeclosure Previous Short Sale due to hardship seasoned at least 36 months.
If seasoned more than 36 months but less than 84 months minimum down payment of 10% is required
If seasoned more than 84 months standard down payment policies apply Previous Short Sale NOT due to hardship must be seasoned at least 48 Months
If seasoned more than 48 months but less than 84 months minimum down payment of 10% is required
If seasoned more than 84 months standard down payment policies apply.
USDA (RD Guaranteed) Chapter 7 Bankruptcy 36 months since discharge Chapter 13 Bankruptcy 36 months since discharge
Foreclosure 36 Months since discharge
*photo courtesy of BasicGov
How Long Do I Have To Wait After A Foreclosure Or Short Sale Before I Can Buy A Home?
The Maine Real Estate Network - Kristen Wheatley - Lewiston-Auburn Maine Real Estate
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Kristen Wheatley, Associate Broker
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7 Comments on How Long Do I Have To Wait After A Foreclosure Or Short Sale Before I Can Buy A Home?
Kristin...what a handy "layout" to give some perspective on possible time-frames, etc. I'll be reblogging this one. Thank you.
Yes, thank you to our mortgage partner, Janice Wescott. Her level of detail is just one of the things I love about her.
Kristen, I saw this as a reblog from David Ames. So glad I didn't miss it as it's pretty comprehensive. I am wondering though why they would make people who put more of their money in (with conventional loans) and had more to lose take a harder hit than the people who put only a minimum down if any based on the loans available in the year the home was purchased (FHA loans). Thanks for sharing!!!
Hi DeeDee. Well I think I've given up looking for rhyme or reason with regards to loans, but the above chart is referencing the types of loans someone would be seeking after foreclosure instead of the type they had before. Since the lower downpayment ones (non conventional) are guaranteed by another entity, there is less risk to the actual bank. That guarantee is really what allows the waiting time to be shorter for FHA, VA, and USDA. It does still seem a bit funny as you pointed out though, that the people who would put more down and go after a conforming loan would have to wait longer.
Kristen:
David Ames reblogged your blog and I am very happy he did. I need this information for me and my clients. I am bookmarking both blogs. Thank you for providing this information to us all.
Kristen: I also found your blog because of David Ames reblog. This is a great list of timelines. I had the same thought as DeeDee when reading the list. You addressed it beautifully. Thanks
Thank you Evelyn and Kathie.