BiggerPockets

How to obtain financing after a bankruptcy, foreclosure or short sale

Monday, October 18

We all have challenges in life and sometimes they don't always result in a positive outcome . You may be facing health, family, financial, or other issues. These can be stressful times for sure, but its great to know that there is light at the other end of the tunnel. We receive questions all time from past, current or potential customers asking us about time frames to restore their buying power after facing bankruptcy, foreclosure, or a short sale. Below are the recent lending guideline time frames for each situation based on loan type. There is light at the end of the tunnel. Thanks to Annamaria at Sensei for sharing this with us.

Obtaining a Conventional Loan

• Chapter 7 Bankruptcy          * 4 years from discharge date
• Chapter 14 Bankruptcy        * 2 years from discharge date
• Foreclosure                        * 4 years from completion date
• Deed-In-Lieu of Foreclosure * 4 years from completion date
• Short Sale * 2 years from completion date

Obtaining an FHA Loan

• Chapter 7 Bankruptcy         * 2 years from discharge date
• Chapter 13 Bankruptcy        * 1 year of the payout must elapse & payment performance must be satisfactory - buyer must receive permission from the court to enter into a mortgage
• Foreclosure                        * 3 years from completion date
• Short Sale                         ***NOTE: This is a recent change*** 1 year from completion date if the borrower was current at the time of the short sale on their mortgage

Obtaining a VA Loan

• Chapter 7 Bankruptcy          * 2 years from discharge date
• Chapter 13 Bankruptcy         * 1 year of the payout must elapse & payment performance must be satisfactory - buyer must receive permission from the court to enter into a mortgage
• Foreclosure                         * 2 years from completion date
• Short Sale                          * No specific information on this yet but assume foreclosure rule of 2 years applies. Once this is officially defined, I will provide an update.

Obtaining a USDA Rural Housing Loan

• Bankruptcy (Ch 7 & Ch 13)    * 3 years from discharge date
• Foreclosure                          * 3 years from completion date
• Short Sale                            * No specific information on this yet but assume foreclosure rule of 3 years applies. Once this is officially defined, I will provide an update.

Feel free to call Mike Moulton, Broker at Bee Home Solutions, Inc. for any of your real estate needs in the Greater Charlotte, NC area. 704-885-0488

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