Waiting Period After Bankruptcy and Foreclosure Guidelines
This blog will cover the waiting period after bankruptcy and foreclosure mortgage guidelines on government and conventional loans. There is a mandatory waiting period after bankruptcy and foreclosure to qualify for a residential mortgage loan. If you had a prior bankruptcy, there is a mandatory two-year waiting period after the discharge date of your bankruptcy to qualify for a residential FHA mortgage loan.
Government and conventional loans require a mandatory waiting period after bankruptcy and foreclosure to qualify for home loans. Not all mortgage lenders have the same credit score requirements. There are mortgage lenders like Gustan Cho Associates that has no lender overlays on FHA, VA, USDA, and Conventional loans. Lenders with no overlays will do mortgage loans with credit scores under 620 credit scores.
There is a three-year mandatory waiting period after the recorded foreclosure date or deed-in-lieu of foreclosure to qualify for an FHA loan. There is a three-year waiting period after a short sale to qualify for a residential mortgage loan. The waiting period time clock starts from the short sale date reflected on the HUD’s settlement statement.
Importance of Verification of Rent on Manual Underwriting
Verification Of Rent is mandatory on manual underwritings, such as in VA and FHA loan cases where the discharge date has not been seasoned two years from the Chapter 13 Bankruptcy discharge date. Or VA and FHA loans where borrowers must qualify one year into a Chapter 13 Bankruptcy Repayment Plan. These are manual underwrites. The only way to use rental verification is by providing the mortgage lender with 12 months of canceled checks or bank statements. If the renter is renting from a property management company, a VOR form completed and signed by the property management company is sufficient. Cash rent payments with receipts from the landlord do not count toward rental verification.
Waiting Period Bankruptcy or Foreclosure Guidelines on FHA Loans
In this section, we will cover the waiting period requirements after bankruptcy. There is a two-year mandatory waiting period from the discharge date of the bankruptcy to qualify for FHA and VA loans. Homebuyers can qualify for FHA and VA loans one year into their Chapter 13 Bankruptcy repayment plan. There is no waiting period to qualify for FHA and VA loans after the Chapter 13 Bankruptcy dismissal date. Four-year waiting period to qualify for conventional loans. Two-year waiting period to qualify for conforming loans after the Chapter 13 Bankruptcy discharge date. Four-year waiting period to qualify for conventional loans after the Chapter 13 Bankruptcy dismissal date.
What Is The Waiting Period Requirements After Foreclosure
This section will cover the waiting period requirements after a foreclosure. There is a three-year mandatory waiting period from the recorded date of the foreclosure, a deed-in-lieu of foreclosure, or the date of the sheriff’s sale to qualify for FHA and USDA loans. There is a two-year waiting period to qualify for VA loans after foreclosure, a deed-in-lieu of foreclosure, or a short sale. A seven-year waiting period exists to qualify for conforming loans (Conventional Loans).
Waiting Period After Foreclosure, and Deed-in-Lieu of Foreclosure on Government Versus Conforming Loans
As mentioned, a waiting period after a deed-in-lieu of foreclosure, short sale, or standard foreclosure on conventional loans differs from government-backed loans. There is a three-year mandatory waiting period from the recorded date of the deed-in-lieu of foreclosure to qualify for FHA and USDA loans. There is a four-year waiting period to qualify for Conventional loans after the deed-in-lieu of foreclosure.
Waiting Period After a Short Sale
There is a three-year mandatory waiting period from the short sale date to qualify for FHA and USDA loans. After a short sale, there is a two-year waiting period to qualify for VA loans. After a short sale, there is a four-year waiting period to qualify for conventional loans. HUD’s settlement statement date is when the waiting period starts.
Limited To No Waiting Period Bankruptcy or Foreclosure Guidelines
Gustan Cho Associates is a national lender with no overlays on government and conventional loans. We are correspondent lenders on non-qm loans, bank statement loans for self-employed borrowers, and alternative financing. Non-QM Loans are portfolio home loan programs where there is no waiting period after the following:
- Foreclosure
- Deed-in-lieu of Foreclosure
- Short Sale
No Waiting Period Bankruptcy or Foreclosure Guidelines on Non-QM Loans
There is no waiting period after the Chapter 7 Bankruptcy discharge date. A 10% to 20% down payment is required, and mortgage rates are slightly higher than traditional government and conventional loans. Many home buyers can use our non-qm loan programs until they have met the mandatory waiting period requirements after bankruptcy and foreclosure. Our 12 and 24-month bank statement mortgage loan program for self-employed borrowers enables self-employed home buyers to qualify for mortgage loans without turning in their tax returns. One or two years of bank statement deposits are averaged, and the monthly average over 12 or 24 months of bank statements is used as monthly income. It can be business or personal bank statements. 50% of the deposits are used on business bank statements. 100% of the deposits are used with personal bank statements.
Can I Get Mortgage Approval Before My Mandatory Waiting Period After Bankruptcy And Foreclosure?
After bankruptcy and foreclosure, waiting two to three years is very long to qualify for a mortgage loan. Many home buyers cannot get a straight answer when they ask a lender whether they can get a mortgage approval before their anniversary date of the waiting period after bankruptcy and foreclosure. This answer depends on the lender.
Many banks and credit unions will not accept a mortgage application until the two or three-year waiting period after bankruptcy and foreclosure have been passed. However, some residential mortgage lenders will accept your mortgage application before the two- or three-year waiting period.
However, it must be close to the two or 3-year waiting period. Your mortgage loan application will be processed and underwritten, and the underwriter will issue you loan approval. However, YOU CAN NOT CLOSE ON YOUR MORTGAGE LOAN UNTIL THE 2 OR 3-YEAR MANDATORY WAITING PERIOD has passed. Or, borrowers can qualify for Non-QM Loans without waiting period requirements after bankruptcy or housing event.
Update on Mortgage Included In Chapter 7 Bankruptcy
If you are reaching your two to three-year mandatory waiting period and you are a home buyer and like to start shopping for a home, consult a loan officer. See if they can process and underwrite your file before the two or 3rd anniversary of your mandatory waiting period.
If you get the thumbs up from the mortgage broker, he or she can issue you a pre-approval letter, and you can start shopping for a new home. Ensure you do not set a closing date until after the two or 3-year mandatory waiting period.
Once you get a signed real estate purchase contract, your lender can start processing, underwriting, and getting loan approval. Underwriters can condition that you cannot close until the mandatory waiting period after bankruptcy and foreclosure have passed.
Non-QM Mortgage Waiting Period After Bankruptcy and Foreclosure
Non-QM Mortgages do not have any waiting period requirements after bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale. However, a 10% to 20% down payment is required. The down payment requirements are dependent on the borrower’s credit scores.
Non-QM Mortgage rates are higher than government and conventional loans. However, there is no private mortgage insurance on Non-QM Loans. There are no maximum loan limits on Non-QM Mortgages.
Self-employed borrowers who have been self-employed for five years may qualify for Freddie Mac’s one-year income tax return conventional loans. Self-Employed Borrowers can qualify for our bank statement mortgage program for self-employed borrowers. No Income Tax Returns are required. Homebuyers with at least a 20% down payment and higher credit scores can qualify for stated-income mortgage loans. Borrowers with late payments in the past 12 months can qualify for Non-QM Loans. For more information on this or other mortgage-related topics, don’t hesitate to contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.
