Waiting Period For Mortgage After Bankruptcy And Foreclosure

This article covers Waiting Period For Mortgage After Bankruptcy And Foreclosure

What Are The Waiting Period For Mortgage After Bankruptcy And Foreclosure:

For home buyers with a prior bankruptcy and/or foreclosure, there is a mandatory waiting period for a mortgage after bankruptcy and foreclosure to qualify for traditional mortgage loans. Traditional mortgage loan programs are government and conventional loans. The waiting period differs depending on the loan program. With a prior Chapter 7 Bankruptcy, there is a mandatory two-year waiting period after the discharge date of Chapter 7 bankruptcy to qualify for VA and FHA Loans. USDA Loans require a three-year waiting period after Chapter 7 Bankruptcy. There is no waiting period to qualify for FHA and VA Loans after the Chapter 13 Bankruptcy discharged date. Borrowers can qualify for FHA Loans and VA Home Loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval. There is a three-year waiting period after foreclosure, a deed in lieu of foreclosure, a short sale on FHA and USDA loans. There is a two-year waiting period after foreclosure, a deed in lieu of foreclosure, short sale on VA loans.

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Waiting Period For Mortgage After Bankruptcy And Foreclosure On Conventional Loans

There is a four-year waiting period to qualify for Conventional Loans after the Chapter 7 Bankruptcy discharged date. There is a two-year waiting period after the Chapter 13 Bankruptcy dismissal date to qualify for Conventional Loans. There is a four-year waiting period to qualify for Conventional Loans after the Chapter 13 Bankruptcy dismissal date. There is a four-year waiting period after a deed in lieu of foreclosure and/or short-sale to qualify for conventional loans. There is a seven-year waiting period after a regular foreclosure to qualify for a conventional loan. Lenders will not allow mortgage applicants to apply for mortgages until a mandatory waiting period has passed. Non-QM Mortgage Lenders has no waiting period after bankruptcy and/or foreclosure with a 30% down payment with non-QM loans.

In this article, we will discuss and cover qualifying for a mortgage after bankruptcy and foreclosure.

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When Can I Apply For A Mortgage After Bankruptcy And Foreclosure

Once the mandatory waiting period has passed, then the lender will submit an application and credit report to either:

Fannie Mae’s DU Automated Underwriting System
and/or Freddie Mac’s LP Automated Underwriting System for an automated approval

If a mortgage application gets submitted prior to the end of the waiting, then the mortgage application will not get an automated approval per DU FINDING and/or LP FINDINGS. The actual waiting period needs to be met in order to get an approve/eligible per AUS.

Waiting Period For Mortgage After Bankruptcy And Foreclosure Or Deed In Lieu Of Foreclosure

There is a mandatory waiting period after the housing event to qualify for government and conventional loans. There is no waiting period to qualify for home loans after foreclosure, deed in lieu of foreclosure, short sale with our Non-QM Loans. There is a mandatory 3 year waiting period after the recorded date of a foreclosure or deed in lieu of foreclosure to qualify for an FHA and USDA Loans. There is a two-year waiting period to qualify for VA Loans after foreclosure, deed in lieu of foreclosure, short sale. There is a seven-year waiting period to qualify for Conventional Loans after regular foreclosure There is a four-year waiting period to qualify for Conventional Loans after a short sale and/or deed in lieu of foreclosure. Once a borrower has completed the three years mandatory waiting period after a foreclosure or a deed in lieu of foreclosure, borrowers should get an approve/eligible via either Fannie Mae’s Automated Underwriting System and/or Freddie Mac’s Automated Underwriting System on FHA and/or USDA Loans. The waiting period under the three years mandatory waiting period will not get approve/eligible per DU FINDINGS and/or LP FINDINGS. There is a three-year mandatory waiting period after the settlement date of the short sale to qualify for USDA and FHA insured mortgage loan. The waiting period is reduced to two years on VA Loans.

Can You Qualify For Mortgage Before The Waiting Period?

Homebuyers who have not met the mandatory waiting period after the housing event can qualify for a mortgage with our new non-QM loans. There is no waiting period after foreclosure, deed in lieu of foreclosure, short sale with non-QM loans. Mortgage Rates are higher than government and conventional loans. 10% to 30% down payment is required. In general, there is no minimum credit score to qualify for non-QM loans. The down payment requirements depend on the risk the lender needs to take. For example, Non-QM Mortgage Lenders can do mortgages one day out of bankruptcy and/or foreclosure with a 30% down payment. After two years out of bankruptcy and/or foreclosure, a 20% versus a 30% down payment is required. The longer the bankruptcy and/or foreclosure has been seasoned and the borrower has reestablished their credit means the less risk the lender has.

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Manual Underwrite

Borrowers who cannot get an approved/eligible per Automated Underwriting System Findings and get refer/eligible per AUS needs to be downgraded to manual underwriting on VA Home Loans and FHA Loans:

There is a price adjustment for a manual underwrite which means a slightly higher interest rate
Verification Of Rent is required on manual underwriting
The maximum debt to income ratio is 50% DTI with compensating factors
Payment Shock of less than 5% is considered compensating factor
Income from the second job with one-year seasoning, but not quite two years and not used as qualified income is considered compensating factor
No late payments in the past 12 months on all manual underwriting
One month’s reserves of PITI required

All VA and FHA Home Loans during and after Chapter 13 Bankruptcy discharged with less than 2 years seasoning of discharged date are manual underwriting. All manual underwriting guidelines apply. Non-QM Mortgage Lenders is a national mortgage company with no overlays on government and conventional loans. Borrowers who need to qualify for government, conventional, non-QM loans can contact us at Non-QM Mortgage Lenders at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Non-QM Mortgage Lenders is available 7 days a week, evenings, weekends, and holidays.

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Waiting Period After Bankruptcy And Foreclosure Start Date After Bankruptcies

There is a mandatory waiting of two years from the discharged date of a Chapter 7 Bankruptcy to qualify for an FHA Loan. Lenders will not go by the filing date but rather the waiting period starts the date of Chapter 7 and/or Chapter 13 Bankruptcy. The Federal Housing Administration has a mandatory one-year waiting period to qualify for an FHA Loan after Chapter 13 Bankruptcy to qualify for FHA Loans. In order to qualify for FHA Loans during the repayment period of a Chapter 13 Bankruptcy, borrowers need to show 12 months consecutive on-time payment history to creditors. Cannot have a single late payment. Borrowers also need the approval of the Chapter 13 Bankruptcy trustee. All Chapter 13 Bankruptcy mortgage loan applications are all manual underwriting. Verification Of Rent is required on all manual underwrites.

Mortgage Guidelines On Verification Of Rent

The only way verification of rent is valid is if renters can provide 12 months of canceled checks and/or bank statements showing that they have made timely payments in the past 12 months to their landlord. Renters renting from a property management company, a verification of rent form provided by the lender and completed and signed by the property manager can be used in lieu of 12 months canceled checks and/or bank statements. If the Chapter 13 Bankruptcy was discharged, then there is no waiting period after the Chapter 13 Bankruptcy discharged date. Borrowers can qualify for an FHA Loan the date the Chapter 13 Bankruptcy is discharged. However, this will be a manual underwriting file. This is because the Automated Underwriting System will not render an approve/eligible per Automated Underwriting System right after a Chapter 13 Bankruptcy discharge. Manual Underwriting submissions require verification of rent. The U.S. Department of Veterans Affairs (VA) has exactly the same mortgage guidelines as FHA Loans when it comes to qualifying for VA Home Loans during Chapter 13 Bankruptcy Repayment Plan and there is no waiting period after the discharged date of Chapter 13.

Fannie Mae And Freddie Mac Guidelines On Conventional Loans

Fannie Mae and Freddie Mac require a mandatory waiting period of 4 years after a Chapter 7 Bankruptcy Discharge. The waiting period start date begins the date of the Chapter 7 Bankruptcy discharged date and not the Chapter 7 Bankruptcy filing date. Fannie Mae and Freddie Mac require a two-year waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharged date. The waiting period start date begins from the actual discharged date of the Chapter 13 Bankruptcy. There is a four-year waiting period to qualify for Conforming Loans after Chapter 13 Bankruptcy dismissal date.

Waiting Period After Bankruptcy And Foreclosure Start Date Guidelines

HUD requires a mandatory waiting period of three years from the recorded date of a foreclosure and/or deed in lieu of foreclosure to qualify for FHA Loans. The waiting period start date is not the day keys were turned in but the actual date of the sheriff’s sale or the date that the deed was transferred out of the homeowner’s name into the name of the lender and recorded on public records. HUD requires a mandatory three-year waiting period to qualify for an FHA Loan after a short sale. The short sale waiting period start date is the date that the property was sold and changed hands that is reflected on the HUD-1 Settlement Statement. VA requires a two-year waiting period after Chapter 7 Bankruptcy, short sale, foreclosure, deed in lieu of foreclosure to qualify for VA Home Loans.

Fannie Mae And Freddie Mac Guidelines On DIL And Short Sale

Fannie Mae And Freddie Mac require a mandatory four-year waiting period to qualify for a conventional loan after a deed in lieu of foreclosure and/or short sale. The waiting period after a deed in lieu of foreclosure start date is the date that the deed was transferred out of the name of the homeowner into the lender’s name. Not the date the keys were surrendered to the lender. With a short sale, the waiting period after short sale start date is four-year after the date the property was sold which is reflected on the HUD-1 Settlement Statement. Fannie Mae And Freddie Mac have a mandatory waiting period of seven years after a foreclosure to qualify for a conventional loan. The waiting period after the foreclosure start date is seven years from the date of the sheriff’s sale or the recorded date of the foreclosure. It is not the date where the homeowner moved out of the home and/or surrendered the property.

Mortgage Part Of Bankruptcy

Homeowners with a prior mortgage or mortgages part of Chapter 7 Bankruptcy, then there is a four-year waiting period to qualify for a conventional loan from the date of the Chapter 7 Bankruptcy discharged date. As long as the mortgage and/or mortgages were part of the Chapter 7 Bankruptcy, the foreclosure can be recorded after the Chapter 7 Bankruptcy discharged date and will not affect the waiting period. Mortgage cannot be reaffirmed after Chapter 7 Bankruptcy. The housing event needs to be finalized as a foreclosure, deed in lieu, short sale. These mortgage guidelines apply to VA Home Loans as well. HUD has different requirements with the mortgage part of bankruptcy in qualifying for FHA Loans. If you had a mortgage and/or mortgages part of bankruptcy, then the waiting period to qualify for FHA Loan is three years after the recorded date of the foreclosure and/or foreclosures. The discharge date of Chapter 7 Bankruptcy is not the start date of the waiting period. The waiting period start date depends on when the deed was transferred out of the homeowner’s name to the lender’s name or the date of the sheriff’s sale.

Gustan Cho Associates are also experts in originating and funding non-QM loans. Non-QM mortgages have no waiting period after housing events and/or bankruptcy. 10% to 20% down payment is required. There is no private mortgage insurance required on non-QM loans. The amount of down payment and mortgage rates are dependent on borrowers’ credit scores.