How long after a short sale, foreclosure, or bankruptcy do you have to wait before getting approved for a new FHA mortgage loan??

I am frequently asked how long someone must wait to be able to buy a house and qualify for a mortgage loan after a short sale, foreclosure, deed in lieu of foreclosure, or bankruptcy? Over the next couple weeks I will post the current underwriting guidelines for different types of mortgage loans. Of course underwriting guidelines change from time to time, but these standards are current as of now.

I will start with FHA loan purchase requirements, since most of the buyers in Sacramento seem to be using FHA loans. FHA loans generally require a 3.5% downpayment, the property purchased must be used as a primary residence, and as of right now a buyer can make a purchase of up to $580,000 in Sacramento, Placer, El Dorado, and Yolo Counties. It is not just a loan for first time buyers...

After Foreclosure, or Deed in Lieu of Foreclosure:
-3 years from date the foreclosure was completed and transferred back to the bank.
-Less than 2 years, but not less than 12 months from the date foreclosure was completed and transferred back to the bank may be acceptable if the foreclosure was the result of "extenuating circumstances." Examples of extenuating circumstances for obtaining a new FHA loan are limited to serious documentable illness or death of a wage earner on the loan that was foreclosed. Unfortunately for the purpose of obtaining a new FHA loan to buy a home after foreclosure, circumstances like divorce or job transfer do not qualify as extenuating circumstances.

After Short Sale:
-3 years from the date the short sale closed and transferred to the new owner.
-No waiting period if the borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale.

After Chapter 7 Bankruptcy:
-2 years from the date of discharge with re-established credit paid as agreed, or no new credit obligations incurred.
-Less than 2 years, but not less than 12 months from the date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances and the borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.

After Chapter 13 Bankruptcy:
-1 year payout period under bankruptcy has elapsed and the borrower's payment performance has been satisfactory and all required payments are made on time.

Of course, you must speak to a loan officer in order to qualify for a new mortgage...I am happy to point you in the right direction to a great loan officer if you want to explore if you qualify after experiencing a short sale, foreclosure, deed in lieu, or bankruptcy.

If you are curious about the Conventional Loan waiting periods, click here.