If you’re like millions of American’s the last couple of years have been tough. People who have lost their jobs, or their houses, or their business didn’t just wake up one morning and say, “Oh, instead of making my payments, I think I’ll take a trip to Belize!” They never imagined they would be one of “those people” with bill collectors and “dings” on their credit.
Well, the good news is that your credit score is really just a snap shot of the last 24 months. Yes, missed payments will stay on your credit file for 7 years – but their IMPACT on your credit is greatly diminished after 24 months. (If one person on the loan has good credit, and one person has “poor” credit click here).
So if the bad credit, foreclosure, short sale or bankruptcy is behind you… how long do FHA and VA make you wait before you can purchase a home again? Below you will find a chart with the Waiting Period and/or guideline for each Program. Note that there’s another column that says “With Extenuating Circumstances.” That could mean, you were in Florida, lost your job, had to Short Sale, and move to North Carolina to get a new job… you would need to PROVE that the reason you did a Short Sale in Florida was due to the job loss, and you would need to prove that the company that had the Short Sale is not going to come back after you for the deficiency balance (some banks do – some banks do not).
If the chart says “UW Discretion” that means that the Underwriter needs to make the call… these days, it is our experience that Underwriting is TOUGH. We MUST make a strong “case” to get any exceptions, we must DOCUMENT the file, and we MUST know what our Underwriter is looking for. (More details on VA Waiting Period Exceptions)
In these situations – you need a GREAT loan officer who will WORK FOR YOU!
| Derogatory Event | FHA | VA | |||
| Waiting Period and/or Guideline | Waiting Period &/or Guideline w/extenuating circumstances | Waiting Period &/or Guideline | Waiting Period and/or Guideline w/extenuating circumstances | ||
| Bankruptcy Ch 7 or 11 | 2 years | 1 year | 2 years | 1 year | |
| Bankruptcy Ch 13 | 1 year with 12 months satisfactory payments to trustee. Must have court permission (not trustee) to incur new debt. If not fully discharged for 2 years loan must be manual UW. | Same | 1 year with 12 months satisfactory payments to trustee and trustee permission to incur new debt. | Same | |
| Foreclosure Deed-in-Lieu | 3 years | UW discretion | 2 years | 1-year w/current satisfactory credit. | |
| Short Sale | Borrower current attime of short sale:No wait if all mtg and installment debts pd on time for 12 months preceding short sale.Borrower delinquentat time of short sale:3 years from date of sale.If previous mortgage was FHA, 3 years from date CAIVRS claim was paid. | Same | No guidance.Typically treated as foreclosure but is at UW discretion. | Same | |
If you have questions about FHA mortgages or VA mortgage loans, and how your particular situation will be viewed in North Carolina with our Underwriting Guidelines (because the State of North Carolina has it’s own set of Mortgage Underwriting Guidelines ON TOP of what FHA and VA set out) please call Steve and Eleanor Thorne, 919-649-5058.
We are truly FHA Home Loan and VA mortgage Loan Experts, and we will give you solid advice! We offer the best interest rates and fees available.
Hi Eleanor thanks for breaking it down. I get asked the “How long will I have to wait….” question a lot being in a high foreclosure/short sale state.
I heard they will do away with the waiting period soon after elections is that true?
There are several bills awaiting the elections. We will have to wait and see. I would be VERY surprised if that is the case, because the new FHFA created by Dodd Frank is in place to AVOID additional risk for Banks – and doing away with Waiting Periods would be considered a High Risk for a Bank. That’s just my opinion. I can see where it would help the Economy
Chapter 7 bankruptcy occurred in 2011 to include the mortgage. A short was completed on the property in 2014. How long before I could apply for a mortgage loan?
If it was in the BK, it wouldn’t have been a short sale. Something about this isn’t right? IF it was a Foreclosure with the 7 in 2011, and discharged then – you could apply now. If it was a SHORT SALE in 2014, the soonest you can do something is 36 months.