"I Just Went Through a Foreclosure...When Can I Buy My Next Home?"

I keep getting asked, "I just went through a foreclosure, when can I buy my next home?"

What IS the "time table" for past and current homeowners who are currently going through or have gone through foreclosure, short sale or BK events over the last several years?

I've asked a loan officer from a direct lender :  "Well, whats the story?", and this is what they're saying.

If you live in the Menifee, Temecula or Murrieta, California areas, and you've gone through foreclosure, short sale or BK events in the last 2 - 4 years CALL ME TODAY!   Let's see if you may be eligible to qualify to purchase your next home.    

Eligibility CHART after foreclosure/BK/Short Sales**                                           

FHA

• Chapter 7 - 2 years after date of discharge with re-established good credit.
• Chapter 13 - minimum 1 year pay-out to court.  All payments paid as agreed and court must approve transaction.
• Foreclosure/ Deed in lieu - minimum 3 year period after trustee sale.  If defaulted loan was FHA loan then it is extended to 3 years after CLAIM paid to lender. Must contact FHA office for that information.  CAIVRS must be checked for clearance by lender to ensure eligibility as well.
•  Short Sales - There are 2 scenarios to consider:
•    1)    Extenuating Circumstances due to borrower job loss, illness, mandatory employer relocation.  As long as circumstances can be documented and all mortgage payments and other debts were current at time of sale and transfer of title to new owner, FHA has no restriction on "waiting" period to purchase a new home.  Divorce is not considered an extenuating circumstance under most cases.
•    2)    For any other situation where borrower was delinquent - 3 years after sale and transfer of title to new owner.

VA

• BK 7 - 2 years with re-established good credit.
• BK 13 - minimum 1 year pay-out to court.  All payments paid as agreed and court must approve transaction.
• Foreclosure/ Deed in lieu - minimum 2 year period after trustee sale.  If defaulted loan was VA, there is a good chance entitlement may be "used or tied up" and veteran may no longer be eligible for VA financing. CAIVRS must be checked for clearance by lender to ensure eligibility as well.  
•  Short sales - minimum 2 year period after sale and transfer of title to new owner.

Conventional:

• BK 7 - 4 years (48 months).
• BK 13 - 4 years (48 months).
• Multiple BK's last 7 years -  5 years (60 months).
• Foreclosures - 59 months.
• Foreclosures - between 60-83 months - primary residence only - no refi - 680 fico - purchase only - 10% down no gifts.
• Deed in lieu - 47 months.
• Deed in lieu - 48 - 83 months - primary residence only - no refi - 680 fico -  purchase only 10% down - no gifts.
• Short Sales - there are 2 scenarios to consider:
•  1) Extenuating circumstances - 2 years after sale and transfer of title to new owner ONLY if due to job loss, illness or mandatory job relocation (divorce not considered extenuating in this situation).  Purchase only - owner occupied - 680 fico - 10% down - no gifts.
•  2) Any other situation is considered as "financial negligence" and borrower must wait 4years after sale and transfer of title to new owner.

** Keep in mind that this information is applying to conforming loan amounts for all categories so if the loan is considered a jumbo or NON- conforming loan, the restrictions in some areas may be greater. ( RIVERISDE / San BERNARDINO counties for FHA has their conforming max at $271,050 even though lenders are able to lend up to $500,000).  The FHA conforming loan amount for LA, Orange and San Diego counties is $625,500, although their loan amount ceiling is higher.  

**  Lending eligibility requirements may vary from area-to-area and/or state-to-state,  and are subject to change without notice.  Brokers and their agents are not attorneys and cannot give legal or financial advice. Contact your attorney or tax advisor before signing listing contracts when considering a short sale of your property.