How to Buy a Home After Bankruptcy, Short Sale or Foreclosure
Nov. 23, 2012
As Dean of Homeownership University Online, Scott Schang is passionate about educating and empowering home buyers to make more informed decisions. You can find more of his articles at his website, www.FindMyWayHome.com
How to Buy a Home After Bankruptcy, Short Sale or Foreclosure
There’s no question the economy has not been kind for many California families. Bad things happen to good people and many folks fell victim to bankruptcy and lost a home either through short sale or foreclosure.
Buying a home after this type of financial hurdle may be much easier than you think. With the recent increase in bankruptcy and foreclosure filings, lenders are changing their guidelines to allow potential homeowners to get back in the real estate market faster. The following explains how these situations affect purchasing a home based on the new FHA guidelines.
After Bankruptcy, buy again using:
• FHA – 2 years from the discharge of a Chapter 7 bankruptcy
• FHA – 1 year from the discharge of a Chapter 13 bankruptcy
• VA – 2 years from the discharge of a Chapter 7 bankruptcy
• VA – Chapter 13 – conclusion of payments sufficient, or after 12 months of on-time payments with permission of trustee or bankruptcy judge
• Conventional – 4 years from the discharge of a Chapter 7 bankruptcy
• Conventional – 2 years from the discharge of a Chapter 13 bankruptcy.
NOTE: If you include a mortgage in your bankruptcy there is also a separate waiting period if you end up losing the home to short sale, deed in lieu, or foreclosure.
These waiting periods run concurrently if you filed bankruptcy as well, so the longer of the two waiting periods will determine eligibility.
After Short Sale or Deed in Lieu of Foreclosure, buy again using:
• FHA – 3 years from date deed of trust transfer completed
• VA – 2 years from date deed of trust transfer completed
• Conventional – 2 years from date deed of trust transfer completed if:
o 20% down payment | Minimum 680 credit score
• Conventional – 3 years from date deed of trust transfer completed if:
o 10% down payment | Minimum 680 credit score
After Foreclosure, buy again using:
• FHA – 3 years from date deed of trust transfer completed
• VA – 2 years from date deed of trust transfer completed
• Conventional – 7 years from date deed of trust transfer completed.
Understanding what the waiting periods are to buy a home after foreclosure, short sale or bankruptcy can save you aggravation and money, as well as help you plan for the future.
Check out this great infographic from Credit Karma!
When Can I Get a Home Loan? – Infographic – An infographic by the team at Credit Karma
