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In this edition of my Q&A series, I tackle the length of time that must pass before you can get another loan after having a negative mark on their credit from a foreclosure, bankruptcy or short sale. The information below is courtesy of a local lender and is reliable as of June 2019. Everyone's situation is unique and you should consult with a lender for further details. If you need a lender referral, let me know and I can provide you with a list of lenders that give great service.
After having a foreclosure on your record, the waiting period for a conventional loan is 7 years. A VA loan is 2 years and an FHA loan is 1 year. If the foreclosure was due to an "economic event out of your control" then the waiting period for a conventional loan is 3 years and an FHA loan is 1 year. As to what defines an "economic event out of your control", that I will defer to a lender to discuss with you directly.
With bankruptcies, it depends on the type of bankruptcy filed. A Chapter 7 filing has a waiting period of 4 years for a conventional loan, and two years for both a FHA and VA loan. A Chapter 13 filing has half the waiting periods. Conventional loans have a waiting period of 2 years and a VA and FHA loan both have a one year waiting period.
Short SaleA Short Sale is when you sell the house for less than the amount due to the bank. There could be several reasons for this, one of the most common is that the home was purchased at the height of the last market cycle and the retail value has not caught back up to those heights. Homes of this type are often referred to as "under water". For these types of sales, the waiting period varies for conventional loans. The waiting period could be from two years to seven years, depending on a variety of factors. The VA has not set official waiting period, however each lender has their own guidelines and many impose a two year waiting period. The FHA has a three year waiting period, however if you were not in default and were current with all your payments, then there is no waiting period.
I hope this has served as a useful guideline for you. If you have questions about your specific circumstances, please reach out to your lender or reach out to me for a lender referral if you do not have a lender.
