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Waiting Period After Bankruptcy and Foreclosure For Mortgage
What are the mandatory waiting period after bankruptcy and foreclosure on FHA, VA, USDA, Conventional, Non-QM, and Jumbo Loans? What are the waiting period after the various types of bankruptcy (Chapter 7, 11, 12, and 13) to qualify for a mortgage loan for primary homes, second homes, investment property, and commercial loans. What are the waiting period after the various types of housing event such as foreclosure, deed-in-lieu of foreclosure, short sale to qualify for a mortgage loan for primary homes, second homes, investment property, and commercial loans.
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Below is an inclusive analysis of waiting periods after insolvency and repossession for different types of loans:
FHA Loans:
Chapter 7 Bankruptcy: Two (2) years after being discharged.
Chapter 13 Bankruptcy: One (1) year during which payment is made per the plan.
Foreclosure: Three (3) years
Deed-in-Lieu of Foreclosure and Short Sale: Three (3) years.
VA Loans:
Chapter 7 Bankruptcy: Two (2) years from being discharged.
Chapter 13 Bankruptcy: One (1) year with court approval and satisfactory payment throughout that period.
Foreclosure: Two (2) years.
Short Sale: Two (2) years.
USDA Loans:
Chapter 7 Bankruptcy: Three(3) years after discharge date.
Chapter 13 Bankruptcy: One(1) year with good payment history.
Foreclosure :Three(3 )years.
Short Sale: Three(3 )years.
Conventional Loans:
Chapter 7 Bankruptcy: Four(4 )from being discharged
Chapter 13 bankruptcy: two(2 )years from dismissal date, four (4 )years from discharge.
foreclosures seven(7 )years ,extenuating circumstances allow applicants to wait for only three(3 )years.
Deed-in-lieu or short sale: four(4 )years. However, extenuating circumstances reduce it by two more years to only two(2 ).
Non-QM loans :
Each lender has its own terms, but they usually differ from conventional loans by being more flexible. Some will give you the loan one day after bankruptcy discharge or foreclosure.
Jumbo loans :
Generally, they use conventional loan criteria but can be stricter sometimes, meaning that some lenders may require up to seven or more if necessary.
For different property types:
- Primary Homes: Same as the above-mentioned standard guidelines.
- Second homes are similar to primary homes, but some lenders may require slightly longer waiting periods.
- Investment properties: One(1 )to two (2) years longer than primary home guidelines.
Commercial loans: These are diverse because different lenders fund them differently; thus, they vary from one lender to another.
They also have more lenient terms than residential ones since current financial status is a key factor.
Chapter 11 and 12 bankruptcies :
They are less common in personal finance, but when they occur among individuals, they are often treated as Chapter 13 bankruptcy would be for that particular person.
Remember: These are general rules, and a lender could be more or less strict than the given policy.
Extenuating circumstances can help reduce the waiting period.
During this time, credit is rebuilt, and good financial records are kept.
Some loan programs might require a larger amount of money, which means longer waiting periods or lower credit scores, thus necessitating more time.
Always check with multiple lenders because their policies will differ widely.
Guidelines change frequently. Therefore, consult with up-to-date mortgage professionals about what is happening now and consider how your situation affects whether you qualify.