Buying After a Short Sale or Foreclosure


How long do I have to wait to purchase a home after a foreclosure, short sale or bankruptcy?

The current economic and housing crisis has made this a common question for realtors and lenders.  Many homeowners who had to sell their house short or let the bank foreclose thought they would not be able to buy another home for at least seven years.  This is not true.  Though the short sale or foreclosure will stay on your credit report for seven years this does not mean you have to wait seven years before you can buy. Buyers can buy using an FHA mortgage in three years or less after a short sale, foreclosure or bankruptcy.

If you sold your home short or lost it to foreclosure three or more years ago then it is time to explore the possibility of buying another home. And it is a great time to buy due to the "perfect storm" in the housing market - record low interest rates combined with the lowest home prices in twenty years!  If you are ready to buy a home contact us today to get started.


Waiting period to purchase a home after a foreclosure:
1) FHA - 3 years from completion of foreclosure
2) VA - 2 years from completion of foreclosure
3) USDA - 3 years from completion of foreclosure
4) Conventional - 7 years from completion of foreclosure

Waiting period to purchase a home after a short sale:
1) FHA - 3 years if in default at the time of the short sale. No waiting period if they were current with no late payments on their mortgage and other installment debt at the time of the short sale and the proceeds from the short sale served as payment in full.
2) VA - 2 years (No specific information provided, treated like a foreclosure)
3) USDA - 3 years
4) Conventional - 2 years 80% maximum LTV, 4 years 90% maximum LTV, 7 years LTV per the eligibility Matrix

Waiting period to purchase a home after chapter 7 bankruptcy:
1) FHA - 2 years from discharge date
2) VA - 2 years from discharge date
3) USDA - 3 years from discharge date
4) Conventional - 4 years from discharge date

Waiting period to purchase a home after chapter 13 bankruptcy:
1) FHA - 1 year of on time payout myst elapse; buyer must receive permission from the court to enter into a mortgage
2) VA - 1 year of on time payout myst elapse; buyer must receive permission from the court to enter into a mortgage
3) USDA - 2 years from discharge date
4) Conventional - 2 years from discharge date or 4 years from dismissal date


(Note: Everyone's situation is different. Contact us for a referral to a mortgage professional to review your specific financial situation.)