Mortgage loan standards required by FHA, Conventional, and VA underwriting required after a bankruptcy, foreclosure, or short-sale with regard to seasoning after discharge and general credit score standards for FHA, Conventional, and VA lending.
FHA Ch 7 BK……must wait at least 2yr’s from discharge before you can apply for an FHA loan.
FHA CH 13 BK….after you have completed this type of bankruptcy you must have no lates on your credit report in the past 12 months and reestablished new credit
FHA and Conventional after Foreclosure or Short Sale….both FHA and Conventional view a short sale and foreclosure as the same and although a short sale is a better option for the general use of credit, the lending guidelines for a short sale vs a foreclosure are the same with respect to how long each program requires a borrower to wait before they can apply for a new loan…On FHA you must wait a minimum of 3 years before you can apply for a mortgage loan after a Foreclosure or Short Sale
Conventional after Ch 7 BK….your bankruptcy much be 4 years out of discharge or dismissal before you can apply for a new mortgage loan
Conventional after Ch 13 BK… 2yr’s after discharge date or 4yr’s from dismissal date before you can apply for a new mortgage loan
Conventional with a Foreclosure and Short Sale…they are very complicated………with few considerations, Conventional may require 5yr’s from the completion date but in most cases, it will go as far out as 7yr’s depending on FICO or credit score and how much down payment you have to put down
All FHA loans will require a minimum credit score of 640 with the exceptions of the Bond programs. Bond programs still require a minimum credit score of 620.
VA purchase loans still require a minimum credit score of 620.
For specific details to your qualification or ability to apply for a loan, call me, Your Frisco Mortgage Guy For Life.
Melanie McLane says
White print on a black background is not very easily read, which is unfortunate, as it appears you have good information.
Pete says
We were just told that we’d need 20% down on an FHA loan?! 4 1/2 yrs post bankruptcy ch 7, 3 yrs 1 week since foreclosure, credit score 660 with open lines of credit/no late payments. Is this true??
Brad Lynch says
Pete,
There is nothing in FHA that ever requires you put down more money for such a thing. You have reached seasoning on both the BK and the Foreclosure. As long as your income is qualifiable, it sounds to me like you should be good to go at 3.5% down right now. Check out this post I wrote about those times: https://yourmortgageguyforlife.com/2011/01/04/696/ Let me know if you need me to pre-approve you for free ok? You can email me directly at Brad@YourMortgageGuyForLife.com
Brad Lynch
Shannon French says
Hi Brad,
Great post! Is the info still accurate as of Jan 2014? In particularly conventional post BK Ch 7. Thanks!
Brad Lynch says
I believe most of the information is still accurate. Feel free to call if you have more questions ok?
YMGFL
Brad Lynch
469-450-2723
Nick says
I was just informed that you can get a conventional mortgage 4 years after chapter 7 with a foreclosure. 640 credit score and 5% down? I have also be preapproved for fha, but only from one bank. I thought fha guide lines where 2 years after bankruptcy or 3 years after forecloser date. It has only been 18 months since forecloser date. Is it possible that they (usbank) have diff. guide lines and wont screw me at closing
Brad Lynch says
The guidelines on this subject have a little “play” in them. It’s possible that you would hear conflicting information about this. If you would like to know what our rates are, and what our guidelines are, feel free to call my office. Brad Lynch
972 537 0665
Shannon French says
Hi Brad, hope all is well! Still use this post as a reference…comes in handy quite a bit. Hoping to get some clarity on a somewhat common scenario: Client has Ch7BK and a foreclosure…I get that for BK alone it would be at a 2 yr clock to purchase again and with a Foreclosure 3 yrs. I’m assuming with a combo deal it’s 3yrs, however, when does that 3 yr clock start ticking? I’m thinking if included in the BK it’s at the BK discharge? But I’ve also had a lender recently tell me that it starts ticking 3 years after when the BANK SELLS IT TO ANOTHER PARTY (it didn’t sell at auction & bank took it back, but the property is still showing in person’s name)! That blows my mind if that’s the case and I’d greatly appreciate your trusted expertise!
Brad Lynch says
I’ve come across this situation in the past myself, though I can’t remember exactly how we handled it. I believe that FHA will go off the day the deed is transferred regardless of the BK date. Again, if I remember correctly, I think conventional will go off the BK file date. Best of luck!!!
Thanks,
Brad
Shannon French says
When a bank takes back a home at foreclosure when it doesn’t sell at auction, we are seeing more and more that the banks are NOT recording the deed transfer at the time of auction…they record it once they have a new buyer and when they purchase later on. So the nightmare scenario for the foreclosed party is if it’s held as an REO for 1, 2, 3+ years before it’s ultimately sold…appears their 3 yr clock doesn’t start ticking until that happens! Sheesh! Makes it complicated for the end buyer of the REO, too, as property taxes likely haven’t been paid as the bills have been going to the original owner of record and highly unlikely the banks been paying them although they are technically the owners.