How Long Must a Buyer Wait after Bankruptcy, Foreclosure, or a Short Sale?

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Need a Home Loan after Short Selling your Home? Bankruptcy? Or Foreclosure?

Before a home buyer decides to look for home ownership after bankruptcy, foreclosure or short sale, it is important to analyze the credit score of the last 6 months (at the very least). The credit requirement is usually between 620 and 640. Other considerations and time limits are as follow:

Guidelines For Conventional Loan Type

"A conventional mortgage refers to a loan that is not insured or guaranteed by the federal government. A conventional, or conforming, mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. It may have either a fixed or adjustable rate."

A buyer may apply for a conventional loan after Chapter 7 bankruptcy has been discharged for 4 years. In case of Chapter 13, however, a conventional loan can be applied 2 years post discharge or 4 years post dismissal. 7 years after the buyer has completed foreclosure, conventional finance would be open to them. In case of short sale, pre-foreclosure sale and deed in lieu of foreclosure (DILF), 2 years waiting period is the norm where Loan to Value (LTV) ratio is 80% and 4 years when it is 90%. Higher Loan to Value ( LTVs) might be needed up to 7 years.

Guidelines for Fannie Mae Loan Type

"Fannie Mae, the commonly used nickname for the Federal National Mortgage Association, is a government-sponsored enterprise, or GSE, with the mission of bringing liquidity, stability and affordability to the U.S. housing market. It does this by purchasing mortgages from banks and then selling them, largely through a process called securitizing. Once the mortgages have been purchased, banks are freed up to make more loans." Read more..

A buyer may apply for a Fannie Mae loan after Chapter 7 or Chapter 11 bankruptcy has been discharged for 4 years. In case of Chapter 13 insolvency, a Fannie Mae loan can be applied 2 years post discharge or 4 years post dismissal. If the buyer has had multiple insolvency filings and has more than 1 filing in the last 7 years, then the waiting period is 5 years. If the buyer foreclosed previously because of extenuating situations that have been documented, additional requirements could be fulfilled to get a 3 years waiting period; otherwise, the waiting period is 7 years. For deed in lieu of foreclosure (DILF), short sale and per-foreclosure sale, the requirements are the same as those for a conventional loan.

Guidelines for USDA Loan Type

United States Department of Agriculture Loans "In order to be eligible for many USDA loans, household income must meet certain guidelines. Also, the home to be purchased or served must be located in an eligible rural area as defined by USDA."

A buyer may apply for a USDA loan after Chapter 7 or Chapter 11 insolvency has been discharged for 3 years. If the previous loan was foreclosed by the home buyer, then financing for home ownership under USDA guidelines can be obtained 3 years after the completion date. If the previous home was short sold, then the rule for foreclosures is applicable, i.e. 3 years.

Guidelines for FHA Loan Type

"The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal. With Low down payments, Low closing costs and easy credit qualifying."

A buyer may apply for an FHA loan after Chapter 7 insolvency has been discharged for 2 years. For Chapter 13 insolvency, the payout should have elapsed for a year and the buyer’s payment performance should be up to satisfaction. However, the home buyer will have to seek special permission from court before entering into a mortgage. In case of prior foreclosures, the completion date should be 3 years ago. If the property was short sold previously, the default waiting period is 3 years. However, this can convert to no time restrictions if, during the short selling time, the borrower was current. Also, the installments and mortgage payments were made within the month of due date in the last year before the application date, and the proceeds of such a sale were considered to be full payment as well.

Guidelines for VA Loan Type

Veteran's Administration "VA Home Loans are provided by private lenders, such as banks and mortgage companies to helps Service members, Veterans, and eligible surviving spouses become homeowners. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms."

A buyer may apply for a VA loan after Chapter 7 insolvency has been discharged for 2 years. For Chapter 13 insolvency, the payout should have elapsed for a year and the buyer’s payment performance should be up to satisfaction. However, the buyer will have to seek special permission from court before entering into a home ownership mortgage. In case of prior foreclosures, the completion date should be 2 years ago. If the property was short sold previously, the default waiting period is 2 years. However, this can be reduced to no time restrictions if, the installments and mortgage payments were made within the month of due date in the last year before the application date. 

When it's time to find the right home loan for you, the Bush Team can help you get started and connect you with a lender that can help you every step of the way.

The Bush Team consistently ranks in the Top 5 Teams at Keller Williams Realty Southwest Las Vegas and number 46 of over 10,000 agents in Clark County- Greater Las Vegas Area. The Bush Team is a group of Real Estate Professional in Las Vegas Nevada. Born and Raised in the Las Vegas area with over 17 years experience. In addition to being well-versed in buying and selling homes, The Bush Team has worked with land development, managed new home community projects and commercial land sales and leasing. Presently, Michelle Bush serves at Keller Williams Realty as a Broker/Salesperson. The Bush Team is a group of accomplished Real Estate professionals who prides themselves on providing outstanding service to their clients. Their experience and knowledge allows them to be well rounded in all aspects of real estate transactions. The Bush Team takes care of their clients by servicing them from list to close. For all your real estate needs, please visit The Bush Team at www.LasVegasAreaHomeSearch.com or call 702.483.9620.

The Bush Team is your Las Vegas-Henderson Home, Investment, Luxury and High Rise Specialist connection. Call us today 702-483-9620 or feel FREE to visit our website anytime at www.LasVegasAreaHomeSearch.com and search our interactive map for all available homes in Las Vegas and Henderson.

Written in part by Daffy and Nickel Lowman
with content from sites as quoted
The Bush Team
Keller Williams Realty Southwest Las Vegas
Call us today 702-483-9620 
www.LasVegasAreaHomeSearch.com

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