How long after foreclosure do you have to wait before you qualify for an FHA or traditional loan?

Asked by restearns, Littleton, CO Sun Oct 20, 2013

Bank approved short sale in CA stalled, eventually foreclosure in 6/2010
We heard 3 years, but now we're hearing 4 years?
We both have credit over 700

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16
Jan Baer, Agent, Littleton, CO
Fri Apr 11, 2014
In Colorado, it is 3 years typically, please check with your FHA Mortgage lender. Good Luck!
1 vote
Amy Chrisman…, Agent, Florence, KY
Mon Oct 21, 2013
3 years for FHA and 7 years for conventional.

The first step you want to take is to find a trusted mortgage lender and loan officer that will guide you through the process.

Good luck!
1 vote
J, Agent, Greensboro, NC
Mon Oct 21, 2013
Thanks so much John Burke. I spoke with another lender last week who is currently working on an FHA Back to Work program and they stated how complex it seems to be with bringing forward all documents and information as requested by the FHA program guidelines. They are trying to prove the individual had good credit but FHA is not accepting the credit report as proof.

The stack of documents accumulated is currently about three inches thick. The program is new, however, I beginning to wonder if its...attainable. Any other thoughts are welcome. Thanks again for taking time to assist.
1 vote
, ,
Mon Oct 21, 2013
Hi Restearns,

Fannie Mae/ Freddie Mac require 7 yrs after a foreclosure and FHA requires 3 yrs from the date of the sale.

The one thing that could make FHA take longer to be eligible is if your previous foreclosure was on a government backed loan like FHA, VA or USDA. If your previous loan was FHA for example:, you'll have to wait 38 months from when FHA paid the claim to be eligible for a new FHA loan. The only way to know for sure is to have a lender pull a CAIVRS report.

There is an exception with FHA under the FHA back to work program which only requires 1 yr to be eligible again in cases where the foreclosure/short sale/bankruptcy was the result of job loss or 20% income reduction for at least 6 months.
1 vote
aftervince19…, , Greenville, NC
Fri Apr 11, 2014
Don't let a foreclosure stop you from buying a new home. See Comstock if you have a buyer in need. They have a flexible credit loan. This program assists homeowners who have recently been through a foreclosure, short sale or have recently emerged from bankruptcy.
http://www.thinkcomstock.com/buy-after-foreclosure
0 votes
Robert McGui…, Agent, Denver, CO
Sat Nov 2, 2013
Restearns,

The normal time frame is 2 years for a bankruptcy and 3 years to get an FHA loan. The conventional loan could be 4-5 years depending on your specific circumstances. It looks like you should be qualified now according to the info you provided. Check with your lender now. Congratulations on moving forward from your previously unfortunate situation.

Robert McGuire
Broker/Consultant
Your Castle Real Estate
http://about.me/robertmcguire33
0 votes
, ,
Tue Oct 22, 2013
@ J,

You're welcome.
It seems like it would be pretty much the same process as approving someone that has had a recent short sale. FHA requires a clean credit history in the 12 months leading up to the short sale and they verify that by looking at the credit report.

The issue maybe with the particular lender and or underwriter being overly conservative.

Please feel free to call me if you have any questions or need any help.

John Burke
Senior Mortgage Banker
Peoples Bank & Trust Co.
(877)228-9069
0 votes
, ,
Mon Oct 21, 2013
Hi J,

I have yet to run into it but it seems pretty straight forward. I think the lender is going to look at the credit report to see if they were late or had collections post prior to the job loss.For example: Let's say you lost your job in July 2012. When I look at your credit, I'll be looking for late payments prior to 7/2012.
0 votes
J, Agent, Greensboro, NC
Mon Oct 21, 2013
Hi John Burke below, I have a question:

Regarding the FHA Back to Work program, I understand that in part to qualify for this program an individual would need to also prove they had Good Credit before the short sale/foreclosure/bankruptcy.

How would an individual provide Proof of Good Credit...what is the timeline?

I've asked this question going on three weeks now with no response from any lenders/banks.

Thank you so much for your time and effort. Lots of folks are asking this question as well.
0 votes
, ,
Mon Oct 21, 2013
After foreclosure you can obtain an FHA loan 3 for conventional it is typically 7 years. The big thing to consider is that the date foreclosed is not the date we go off of we go off the date of sale which usually isn't to long after but can take some time. I would be more than happy to assist you in seeing if these dates match up and making sure that we can get you pre-approved for a loan.

I hope this information helps.
0 votes
Jan Baer, Agent, Littleton, CO
Sun Oct 20, 2013
FHA is Federal and typically 3 years; a traditional loan (conventional) will depend upon your lender and Underwriter, so best to check with a local Littleton Lender. Hope this is helpful. Let me know if you need a recommendation. I have always had good luck with the Local Credit Unions for my buyers who may have had a Short sale or previous Foreclosure, but with good credit scores and stable employment history.
0 votes
annalisa amb…, Agent, Denver, CO
Sun Oct 20, 2013
0 votes
annalisa amb…, Agent, Denver, CO
Sun Oct 20, 2013
12 months with a verifiable economic hardship and not one late payment since.
0 votes
Simon Campbe…, Agent, Miami Beach, FL
Sun Oct 20, 2013
As a home owner, short sales will enable you to get financing to purchase another home quicker.

Here is what my latest research has revealed:

The latest Fannie Mae guidelines state that after a short sale, there is a mandatory waiting period of two years for a loan with an 80% maximum LTV (loan-to-value ratio), or four years for a loan with a 90% LTV.

FHA requires borrowers who weren't paying their mortgage when they sold their house to wait three years before they can qualify for a home loan. That time penalty may be waived in certain cases, including long-term job loss. There is no FHA time penalty for homeowners who made their house payments in the 12 months before their short sale. The size of a down payment can also shorten the waiting period.

The USDA loan program is a popular option for people who have had a short sale or foreclosure in their past because it is one of the mortgage programs with the shortest waiting periods and most flexible underwriting guidelines. The waiting period for a USDA loan after a short sale can be as little as 2 months in the right situation.

With a foreclosure, the waiting period is 5 years up to 7 years. If you have extenuating circumstances-- typically situations beyond someone's control, like a job loss -- it can be cut down to 3 years.

Fannie Mae has just upped the length of time it takes from the completion of a foreclosure sale until the borrower can get a new mortgage from four years to five years.

Perhaps the best option for obtaining a mortgage after foreclosure is with a federally insured FHA loan. The minimum time between the completion of foreclosure until when you can be approved for an FHA loan is three years -- whether or not there are extenuating circumstances. Still, FHA borrowers will have to show that they've been practicing good bill-paying habits since the foreclosure.
0 votes
Jan Baer, Agent, Littleton, CO
Sun Oct 20, 2013
Typically 3 years, but best for you to check with your lender. If you need a good recommendation for a local Littleton Lender, please let me know, I'm happy to help you in any way with your real estate needs and services. Cheers, Jan Baer 303 -931-5853
0 votes
So its not a State/Federal requirement? Its up to each lender? Not the answer I was looking for.
Flag Sun Oct 20, 2013
Trent Butler, Agent, Brandon, MS
Sun Oct 20, 2013
Hello, Ive always known it to be 3 years. If they are changing it, Ive heard nothing about it. However all rules are subject to change.
0 votes
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