How Long Is the Waiting Period After Bankruptcy or Foreclosure?

March 25, 2019

 

Is it true that you have to wait seven years after a foreclosure or bankruptcy in order to buy a home again?

 

We get these kinds of calls all the time, and we'd like get the information to you.

 

What if you've filed a Chapter 7 Bankruptcy?

 

This is one of the most common ones that we see. And for FHA, VA, and USDA, most of those are gonna make you wait two to three years, ideally, from the discharge date of that bankruptcy. All three also allow up to one year after that discharge date with some extenuating circumstances. 

 

If you're looking for a conventional loan, you're typically going to need to wait four years from the discharge date in order to qualify for a conventional loan.

 

What if you've filed a Chapter 13 Bankruptcy?

 

This is very similar to the Chapter 7 guidelines, except for all of these have shorter waiting periods. For FHA, USDA, and VA loans, typically you can do it as early as 12 months after the Chapter 13 is filed. You will definitely need proof of timely payment to the bankruptcy court for at least 12 months. These are almost always manual underwrites, which can be a little more strict in regards to other aspects of your loan application like debt-to-income ratio and even FICO score.

 

For conventional loans, you're looking at generally two years from the discharge date.

 

What if you've had a foreclosure?

 

This is also a common question we receive. For FHA and USDA loans, generally speaking, you're gonna have to wait three years from that foreclosure date. VA's a little more lenient, and they will allow borrowers to get a new loan after at least two years from that foreclosure date. 

 

One side note is that USDA is unique in that if a foreclosure happened where your real property is included in the bankruptcy that was filed they don't make you wait 3 years from the foreclosure date.  Many times what happens is that the actual foreclosure is much later than when the bankruptcy is discharged. USDA will allow you to count from the bankruptcy date instead the foreclosure date. 

 

With conventional loans is where you're typically going to have a seven year waiting period from the date of a foreclosure. There are some shorter time frames with extenuating circumstances, but generally you're looking at at least seven years for a conventional loan.

 

When does the clock start from these events?

 

It depends on what event you have and what loan product that you're looking to use.

 

For example, Freddie Mac counts from the date of the derogatory event up to the application date of the new loan. However, FHA counts it from that derogatory event date up to the FHA case number assignment date, which is something that we order as the lender once you have a contract on a property.

 

We also have a FREE in-depth chart of all of these different waiting periods based on the type of loan and the guidelines associated with them.  This will break down ALL the details

 

As always, since everything isn't always black and white when it comes to these things, reach out to us and let us give you a complete credit consultation so we can give you the best advice for your specific situation.

 

 

 

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