When Can I Buy Again After Foreclosure, Short Sale or Bankruptcy?
We have a lot of customers contact us and wonder about their credit. There’s a lot of options and there’s unfortunately just as many “mis-information” out there. So we wanted to set the record straight on one of the most common questions, When Can I Buy Again After Foreclosure, Short Sale or Bankruptcy?
FHA Loans
- Foreclosure (or Deed in Lieu of Foreclosure): 3 years from the date of the foreclosure, with re-established credit; and less time with extenuating circumstances [Note that foreclosure and Deed in Lieu are treated as exactly the same!]
- Short Sale: 2 years from the date of the closed sale when the deed transferred to the new owner.
- Chapter 7 Bankruptcy: 2 years from the date of the discharge of the bankruptcy, a borrower is eligible for a new FHA loan, so long as the borrower has maintained good credit since, with no derogatory items, and has re-established good credit
- Chapter 13 Bankruptcy: A borrower can be eligible for an FHA loan 1 year after the payout period has begun, so long as everything has been paid on time, and with court approval (which your lender, me, will help you to request and obtain).
VA Loans
- Foreclosure: 2 years from the date the foreclosure was complete.
- Other Circumstances: All other derogatory credit situations mirror the time-frames of an FHA loan.
USDA Rural Housing Loans
- Chapter 7 Bankruptcy: 3 years from the discharge date.
- Other Circumstances: All other derogatory credit situations mirror the time-frames an an FHA loan.
Conventional Loans
(Conventional Loans are loans the conform to Fannie Mae and/or Freddie Mac Guidelines)
- Foreclosure: 5 years from the completion date. From the fifth to seventh year following the foreclosure completion date, the purchase of a principal residence is permitted with a minimum 10% down and 680 FICO score. The purchase of a second or investment property is not permitted for 7 years. Limited cash out refinances are permitted for all occupancy types.
- Chapter 7 Bankruptcy: 4 years from the discharge date.
- Chapter 13 Bankruptcy: 2 years from the discharged date.
- Short Sale: Depends on how many months behind at the time of the short sale (could be as little as a few months with 20% down)
All of the “Buy again” options allow for something called “extenuating circumstances” which is very similar to a “short sale hardship.” The exception to this is divorce unfortunately. This also sheds some light on the foreclosure vs short sale question. If you are struggling to get your score up after these events, there’s only one program we’ve seen work despite of the shadiness in this industry, CleanSlate. If you need a free guide on fixing your credit pay them a visit.
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