Experiencing a severe credit event such as foreclosure, short-sale, deed-in-lieu of foreclosure or bankruptcy does not mean you will never be eligible to get a home loan. This chart provides the time-out periods required by event. The assumptions are that you have established acceptable credit scores and meet underwriting guidelines. In certain circumstances, one may qualify for a mortgage upon discharge of a Chapter 7 or during a Chapter 13.
| Adverse Credit Event | |||||||||
| Loan Type
Eligibility Date |
Foreclosure | Short Sale / Deed- In-Lieu of Foreclosure | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy | |||||
| Conventional
Date of loan application |
• 7 years from transfer of deed unless discharged in bankruptcy.
• 2 years from transfer of deed unless discharged plus, extenuating circumstances*. |
• 4 years from transfer of deed.
• 2 years with extenuating circumstances*. |
• 4 years from discharge.
• Includes foreclosure if listed in bankruptcy.
• Less than 4 years from discharge with extenuating circumstances*. |
• 2 years from discharge with reestablished credit, acceptable FICO credit scores and, no new bad credit. | |||||
| FHA
Date of FHA Case Number |
• 1 year from transfer of deed to lender with Extenuating Circumstances*.
• Not less than 12 months from deed transfer*. |
• 1 year from transfer of deed to loan servicer with proof of Extenuating Circumstances*.
• Wait period is not needed if debtor is current and must take a job in a different market. |
• 1 year from Discharge with proof of Extenuating Circumstances*.
• Reestablished credit
• Not less than 12 months from discharge*.
• Typically, 2 years post discharge. |
•12 months payments to Chapter 13 Trustee with no 30-day late payments and, no new bad credit and, new established credit.
•12 months housing payments with no late pays. |
|||||
| VA
Date of credit approval |
• 2 years from transfer of deed to lender.
•Between 12-23 months from deed transfer* |
• 2 years from transfer of deed to loan servicer*
• Wait period is not required if debtor is current and must take a job in a different market |
• 2 years from discharge with new good credit.
•Between 12-23 months from discharge with proof of Extenuating Circumstances*. |
• Same as FHA | |||||
| USDA
Date of credit approval |
• 3 years from transfer of deed to loan servicer.
• Less than 3 years With extenuating circumstances*. |
• 3 years from transfer of deed to loan servicer*
• Wait period is not required if debtor is current and the job is transferred to a different market. |
• 3 years from discharge with reestablished credit.
• Less than 3 years from discharge*. |
• Same as FHA | |||||
| Reverse
Date of FHA Case Number |
• 3 years following the sale date.
• No waiting period with extenuating circumstances. |
• 3 years following the sale date.
• No waiting period with extenuating circumstances. |
l Upon discharge with extenuating circumstances. | • During the repayment plan with specific language provided by a Court Order. (A Trustee letter is not acceptable – contact me for the required language). | |||||
| What events may qualify as extenuating circumstances? | *Extenuating circumstances are events beyond a debtor’s control such as death or disability of a wage earner, medical bankruptcy, distant employment transfer, or reductions-in-force, or serious long-term uninsured illness). Such events must be documented and verified, subject to underwriting review. An inability to sell the house does not qualify. | ||||||||
Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO Lic. 100008715 | OR Lic. 257365 | NMLS 257365 | Originally published in 2010 and updated regularly | June 8, 2019 Contact me to obtain a pdf copy of this chart.
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