If you experienced financial difficulties that led to a foreclosure on your home during the recent recession, you aren’t alone. Although a foreclosure can have a severe impact on your credit, you may be able to overcome the challenges that foreclosure adds to getting a mortgage and successfully apply for a home loan again.

The period of time you will have to wait after the foreclosure will depend on the type of mortgage you want. The following guidelines will help you determine if it is the right time to visit a mortgage company or if you should wait a little longer to submit your application.

FHA Loans

Foreclosure 1-3 years from the completion date. (As little as 1 year if the borrower qualifies for “Back to Work. See Mortgagee Letter 2013-26 for qualifying criteria.)
Short Sale Deed-In-Lieu 3 years from the completion date.
Chapter 7 Bankruptcy 2 years from the discharge date.
Chapter 13 Bankruptcy 2 years from the discharge date. (Anything less than 2 years but greater than 1 year must be downgraded to a manual underwrite, which lenders typically don’t do).

VA Loans

Foreclosure 2 years for loan amounts <$424,100 and 7 years for loan amounts >$424,100.
Short Sale 2 years for loan amounts <$424,100 and 7 years for loan amounts >$424,100.
Chapter 7 Bankruptcy 2 years for loan amounts <$424,100 and 7 years for loan amounts >$424,100.
Chapter 13 Bankruptcy 1 year if the repayment period has elapsed. However, it is very difficult to get approved. 7 years for loan amounts >$424,100. (Applicant must also receive written permission from the bankruptcy court/trustee to enter into a mortgage transaction; otherwise, the minimum waiting period is 2 years).

USDA Loans

Foreclosure 3 years from the completion date.
Short Sale 3 years from the completion date.
Chapter 7 Bankruptcy 3 years from discharge date; 1-year possibility with proven extenuating circumstance; less than 3 years is difficult to get approved.
Chapter 13 Bankruptcy 1 year of the repayment period has elapsed. (Applicant must also receive written permission from the bankruptcy court/trustee to enter into a mortgage transaction – otherwise, the minimum waiting period is 2 years).

Conventional Loans

Foreclosure 7 years from completion date; 3-year possibility with proven extenuating circumstances.
Short Sale 4 years from completion date; 2-year possibility with proven extenuating circumstances.
Chapter 7 Bankruptcy 4 years from discharge date; 4 years from dismissal date; 2-year possibility with proven extenuating circumstances.
Chapter 13 Bankruptcy 2 years from discharge date; 4 years from dismissal date; 2-year possibility with proven extenuating circumstances.

 

The first step toward getting approved for a mortgage after foreclosure or bankruptcy is to re-establish your credit and finances. If you have been making timely rental payments in the interim, and you haven’t taken on a lot of new debt, it will help you get your mortgage application approved. You should also strive to save as much money as possible to go toward your down payment. Many lenders require more of a down payment following a foreclosure.

Knowing the best type of loan to apply for can be difficult, especially when you can expect to meet greater challenges than other buyers who don’t have the financial history that you do. At A and N Mortgage, you can apply for a home loan online, and we will help you go through the process and help you determine the right type of loan for your circumstances.