After the downward trend of housing prices in Northern Virginia, there have been several interested home buyers contact us with credit problems. Most are unfamiliar with the amount of time required for home purchases after credit problems. This is due to periodic changes by the Federal Trade Commission and government related services to the housing market. The latest time frames between qualifying for a mortgage after bankruptcies, short sales, and foreclosures are listed below. Most of these folks seeking our advice are credit challenged by a credit history which includes low scores, a short sale, foreclosure, or bankruptcy. So this chart should be of some use.
These are waiting periods of applying for a mortgage after a housing related credit problem.
|Credit Problem||FHA & VA Loans||Conventional Loans|
|Short Sale*||3 years||4 years|
|Foreclosure||3 years||4-7 years|
|Bankruptcy||2 years||4 years|
|Bankruptcy (mortgage)||3 years||7 years|
* Mortgage balances current during a short sale transaction allow the seller to repurchase a home immediately.
These are basic rules followed by government sponsored enterprises such as Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), and the Veteran’s Administration (VA). There are occasional exceptions. We have closed on a home for a client who obtained a mortgage after involvement with a short sale requiring the waiting period of the 3 year rule. This exception was a case involving a divorce, the finalized property settlement, and payment receipts to the responsible party for mortgage payments. Our client sold his home through a short sale while getting a divorce. Two years after the completed sale our client wanted to buy another home. He produced the necessary documentation to the underwriter (cancelled bank checks for mortgage payments until closing) to get another mortgage.