Home » Blog » Waiting Period » 2020 When Can I Qualify for a Mortgage After Bankruptcy, Short Sale, Foreclosure or DIL
Waiting Periods for buying after bankruptcy foreclosure short sale deed in lieu

2020 When Can I Qualify for a Mortgage After Bankruptcy, Short Sale, Foreclosure or DIL

Qualifying for a mortgage after financial hardship is normally only a matter meeting a minimum waiting period.

The waiting period is determined by the nature of the financial hardship and the type of mortgage your are applying for.

If you’re like most people that got caught up in the financial crisis in 2008, you were either directly affected, or know someone that was directly affected.

Check Eligibility Now - Get Started Here!

Many homeowners found themselves in serious financial hardship resulting in a bankruptcy, foreclosure, deed in lieu or short sale.

Often, a bankruptcy is followed by the default of a mortgage, and the loss of a home to foreclosure, short sale or deed in lieu.

It can get tricky knowing which waiting period apply and how to figure out the shortest waiting period possible.

This is a very popular subject as you can see if you scroll to the bottom of this article and see over 2,200 questions and answers dating back to early 2011.

2020 FHA Guidelines

  • Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.  You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
  • Foreclosure – You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.
  • Short Sale / Deed in Lieu – You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date. FHA treats short sale, deed in lieu and foreclosure as the same waiting periods.

Credit must be re-established no late payments in past 12-24 months, depending on hardship

Are You Eligible for Mortgage Now? Let's Get Started!

Application Date must be after the above waiting period to be eligible for FHA financing after hardship.

2020 VA Guidelines

  • Bankruptcy Ch 7 – You may apply for a VA guaranteed loan TWO (2) years after a chapter 7 Bankruptcy
  • Bankruptcy Ch 13 – If you have finished making all payments satisfactorily, the lender may conclude that you have reestablished satisfactory credit.
    • If you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
  • Foreclosure / Deed in Lieu – You may apply for a VA guaranteed loan TWO (2) years after the sale/deed transfer date.
  • Short Sale – VA does not recognize a short sale as a derogatory event.  If you are able to credit qualify for a VA loan, a short sale would not prevent you from being eligible for VA financing. – Updated 4/2016

Credit must be re-established with a minimum 620 credit score

Find the Right Lender. Find the Right Loan. Get Help Now!

Application Date must be after the above waiting period to be eligible for VA financing after hardship.

2020 USDA Guidelines

  • Bankruptcy – You may apply for a USDA rural loan THREE (3) years after the discharge of a Chapter 7 or 13 Bankruptcy
  • Foreclosure – You may apply for a USDA rural loan THREE (3) years after the sale/deed transfer date.
  • Short Sale / Deed in Lieu of Foreclosure – If you had big issues the deed in lieu of foreclosure will be viewed as a foreclosure and you would want to wait no less than 3 years if the score is under 640.  Over 640 your UW will make the call but typically not less than one year.
  • UPDATED 12/2014 – Mortgage debt included in Bankruptcy will go by BK discharge date, and and subsequent foreclosure will not count as an additional waiting period, as long as you are off title for any defaulted mortgages.
  • Link to 12/1/2014 USDA Guideline – HB-1-3555  Attachment 10-B  See Page 31 of 34

Date of Credit Approval must be after the above waiting period to be eligible for USDA financing after hardship.

Just want to Ask a Question? Click Here to Start!

2020 Conventional (Fannie Mae) Guidelines

  • Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, TWO (2) years from the discharge of Chapter 13
  • Foreclosure – You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Foreclosure / Short Sale / DIL included in Bankruptcy – You may apply for a Conventional, Fannie Mae loan after a minimum FOUR (4) years from the DISCHARGE of a Chapter 7 Bankruptcy, TWO (2) years from the DISCHARGE of a Chapter 13 Bankruptcy
  • Short Sale / Deed in Lieu of Foreclosure – UPDATED – Effective 7/29/2014:  Short Sale or Deed in Lieu of Foreclosure not included in a Bankruptcy has a new Waiting Period of FOUR (4) years from the date your name is removed from title.

Credit must be re-established with a minimum 620 credit score.

Find the Right Lender. Find the Right Loan. Get Help Now!

2020 Conventional (Freddie Mac) Guidelines

Bankruptcy (7,11,13) – You may apply for a Conventional, Freddie Mac loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, or as determined by Loan Products Advisor (AUS)

  • Foreclosure – You may apply for a Conventional, Freddie Mac loan SEVEN (7) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)
  • Foreclosure / Short Sale / DIL included in Bankruptcy – You may apply for a Conventional, Freddie Mac loan after a minimum FOUR (4) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)
  • Short Sale / Deed in Lieu of Foreclosure –
  • You may apply for a Conventional, Freddie Mac loan FOUR (4) years after the sale date of your foreclosure or as determined by Loan Products Advisor (AUS)

Credit must be re-established with a minimum 620 credit score.

Find the Right Lender. Find the Right Loan. Get Help Now!

Fannie Mae and Freddie Mac have reduced waiting periods in cases of extenuating circumstances

Date of Credit Report must be after the above waiting period to be eligible for Conventional financing after hardship.

NOTE:  I do not yet have a success story for someone qualifying for the reduced time frames that Freddie Mac proposes to offer.  That shouldn’t stop you from trying.

2020 Jumbo Mortgage Guidelines

  • Bankruptcy – You may apply for a Jumbo mortgage loan once any chapter of bankruptcy has been discharged for FOUR (4) years, FIVE (5) years if multiple bankruptcies occur on credit profile.
  • Foreclosure – You may apply for a Jumbo mortgage loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure – You may apply for a Jumbo mortgage loan:
    • SEVEN (7) Years from Short Sale or Deed in Lieu of Foreclosure with Maximum 80% Loan to Value
    • NOTE: There are investors out there that will allow you to buy again in FOUR (4) years after a short sale, but expect higher rates, higher fees, and possibly larger down payment requirements.  Jumbo lenders have not yet loosened up the qualifying guidelines for buying after a hardship.
    • It may make financial sense to consider a portfolio Jumbo lender that offers high rates so that you can take advantage of today’s market.  Once your short sale is seasoned, refinance into a more favorable, longer-term loan.

NOTE:  If hardship is the result of an extenuating circumstance, waiting periods may be reduced.  Contact your lender for details.

Portfolio Loans

We are beginning to see more and more portfolio loans in the market that have relaxed waiting periods for bankruptcy, foreclosure, short sale and deed in lieu of foreclosure.  These are not necessarily subprime loans, but they do often have higher interest rates and higher closing costs.

Portfolio loans are offered by investors that are looking at other compensating factors, like high credit scores, low loan to value (larger down payments), and reserves.

Do not rule out a portfolio loan as a “bridge” to get you into your home until you reach your waiting period for refinancing into a loan with better terms.

“Buy Again” Questions Answered

If you are like most people that visit this website, you’ve got a mortgage problem or an unanswered question and you’re having trouble getting answers.

We are here to help you get the right answer, the first time, and connect you with an experienced loan officer that can help if necessary.

Asking Your Question is Easy

  • Email me Directly:  Simply click the email at the top of the site.  These questions come directly to me and are answered very quickly.
  • Leave a Comment:  Below every article is the option to leave a comment or question.  We see these comments and questions in real-time and every question is answered.

NOTE:  This page was first created in February 2011, and is updated as new guidelines are released.

This page is monitored by experts that understand the guidelines, and have successfully guided countless families back into homeownership after significant financial hardship.

About the Author

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

Leave a Question or Comment About this Topic

  • Evette Odom says:

    Hi Scott, first thank you for your service. I thought my situation was unique and realize it is not and there is hope.

    In 2007, my husband and I took out a line of credit. We signed a deed of trust for line of credit.
    However, in 2008, the market crashed and my husband lost his job. We tried to hold on to our Home by paying our 1st mortgage and have been able to pay it on time. However, we did not pay on the 2nd loan. In 2014, my husband and I filed for bankruptcy (7). This January I received a letter from a law firm indicating we owe money from the second loan, which was included in the bankruptcy. Since then, on March 19th, Ashland Capital the new owner of the Econ’s loan has filed a notice of default and has stated we need to pay 39k to be reinstated. I was able to get the full pay off amount and it is more than we want to pay. What are our options?

    • Scott Schang says:

      Hi Evette, thank you for the kind words. This has not been so common until recently. It’s interesting that these second lien holders are now coming out of the woodwork to try to grab money off of the distressed assets they bought from someone else.

      Unfortunately, you don’t have a lot of options if you have the equity in the home. They are legally able to do what they are doing. Most second lien holders do not file for notice of default because after everyone else gets paid, there isn’t always enough left for them.

      If you have the equity, the only thing you really have is our negotiating power. You have to figure out what will make them go away. They purchased the debt for pennies on the dollar and are just trying to take advantage of people in a bad situation.

      Personally, I would threaten them with a social media campaign calling out that they are preying on Americans in the middle of a nationwide shutdown that has 30 million people filing for unemployment benefits. It’s almost like they are hoping that you’re out of work and they get to foreclose on your home and resell it at a profit.

      Maybe the local news would be interested in this story?

      This is a tough one for me, because they have a right to collect on this debt. But their timing is really sleazy. It’s just not necessary to do this at this time.

      If it’s any consolation, there is a foreclosure moratorium that forbids most homeowners from being foreclosed on during the COVID-19 national emergency.

      Does this help?

      P.S. If you do have the equity, but not the money, it may be possible to refinance your home to pay off the second lien holder.

      • Timothy A says:

        But she said this second-position loan had been included in the bankruptcy. So how can this lender collect it?

        • Scott Schang says:

          Great question! When you include secured debt in bankruptcy, like a car or home, the bankruptcy protects you from having delinquencies reported to the credit report after the bankruptcy, regardless of payment history, and the credit cannot attempt to collect late payments on those debts.

          That said, if you default on secured debt (stop making payments) the creditor is allowed by the terms of the contract to repossess or foreclose, and take the collateral back.

          In the case of having a first and second mortgage, I’ve seen this before, and it’s ugly. Borrowers pay the first mortgage after the BK, but not the second mortgage. The second lien holder CAN foreclose to get their money.

  • Ronald says:

    Hi I had three foreclosure do to hardship and the 2008 mortgage crash. I lost two secondary homes FHA 13 years ago due to the 2008 mortgage crash. My personal FHA home was foreclosure in 2014, after having a major hardship, my wife had a very bad trucking accident which caused her to have several surgeries. Now six years later I have rebuilt my credit, have great income source and assets can I now use my VA loan for the first time to buy a home for my family?

    • Scott Schang says:

      Hi Ronald, I’m so sorry to hear about your hardship, and congratulations on turning your credit around!

      The guidelines for using your VA home loan benefit after a foreclosure requires only a 2 year waiting period from the date of the foreclosure (of the last property to foreclosure).

      I don’t see any reason why you could not qualify now. This is a little tricky though. You need a loan officer that is an expert at both foreclosure guidelines and VA underwriting guidelines.

      If you would like, I can introduce you to someone I know and trust to help you get approved.

      Shoot me an email if you would like an introduction – scott@findmywayhome.com – Let me know what State you’re buying in when you send the email.

      THANK YOU for your service to your Country, I hope this helps?

  • Kim says:

    Hi I filed bankuptcy in 2008. My house was included and it was discharged. I decided to pay to stay so I basically made payments at a modified rate but I never reaffirmed. I realized I would never be able to retire and wanted to sale the house and down size. I could not sale the house so I did a deed in luie in December. I have been told because I stayed in the house they will not use the bankruptcy date.

    • Scott Schang says:

      Hi Kim, as long as we can document that the mortgage holder was included in the bankruptcy, you would be able to use Fannie Mae conventional mortgage guidelines to buy 4 years from BK discharge.

      It doesn’t surprise me that you’re being told this, not many loan officers or underwriters know this guideline. I can introduce you to someone that I know and trust that has experience with these guidelines.

      If you would like an introduction, shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in?

      Hope this helps?

  • Michelle says:

    My foreclosure waiting period is over 5/2020. Found a home. Is there a bank that will start the process a little early or give a pre-approval letter? Settlement will be 8/2020.

    • Scott Schang says:

      Hi Michelle, you can definitely get a pre-approval now based on your credit and income eligibility. Basically, a lender will look at your credit, income, and assets and will be able to make sure you qualify for the loan as soon as the waiting period is over.

      When you say your waiting period is over, what kind of loan are you applying for?

      Also, it’s important that you work with a loan officer that has experience with foreclosure guidelines to make sure there are no surprises along the way.

      If you are not currently working with a lender that you know and trust, I can introduce you to someone that I know that has a lot of experience with these guidelines.

      If you would like an introduction, shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in?

      Hope this helps?

      • Michelle says:

        What type of loan would you recommend?

        • Scott Schang says:

          The waiting periods are different for different types of loans. For instance, if you filed bankruptcy, and included the mortgage, that creates 2 waiting periods if you are applying for an FHA loan. 2 years wait from a BK discharge, and 3 years for the foreclosure.

          If you’re using Conventional financing in the above scenario, you are eligible 4 years from the discharge of the BK, and you can ignore the subsequent foreclosure.

          Now, if you did not include the mortgage in bankruptcy, FHA is 3 years, Conventional is 7 years.

          I recommend the loan that you qualify for soonest 🙂

  • Guest20 says:

    Hello, I understand the waiting period is 2 years after foreclosure for a VA Loan. I thought we had already met or close to meeting that time frame until we began exploring buying again last year. We recevied a COE and then proceeded to try to get a pre-approval etc. The person that handled advised we didnt qualify because 1-credit score wasn’t at 620(which has now been improved), and 2- Because apparently the foreclosure wasn’t reported until 8/2018 on credit so we won’t qualify until 8/2020. Now that we are getting closer to this date, I would like to know and get a better understanding of how it works; Do we need to wait until August to begin the home buying process, or could we say start house hunting in June or July and begin process then? Also, can you remind what the house buying process would be like? I can’t recall how this all works, but am really anxious to get a home for our family again 🙂 I appreciate your help!!

    • Scott Schang says:

      First and foremost, THANK YOU for your Service! This is a really good question and one that hopefully I can easily answer. Yes, the waiting period is 2 years from the date your name was removed from title to the property, NOT the date on the credit report.

      You should be able to verify the actual date that the foreclosure was completed from the County recorder’s office. This is usually a public record.

      The date on the credit report may not be accurate.

      If you would like an introduction to someone that I know and trust that has expertise with this type of situation, shoot me an email to scott@findmywayome.com and I can make an introduction.

      Hope this helps?

  • Laurie says:

    I filed for chapter 7 bankruptcy in 2009 with home included due to divorce. Chapter 7 bankruptcy was discharge in 2009, but house was not foreclosed on until Oct. 2017. I was preapproved for home loan 2019. I left home 8 years prior to forclosure, and did not know when foreclosure happened. I put offer in on home in 2019, after I was preapproved. I was turned down for loan, when it went to underwriter, because foreclosure was on public record. I can only assume it was not On credit report because it was included with banruptcy? It has now been almost 11 years since bankruptcy, but only 2 and a half years from actual foreclose. How long do I have to wait for either FHA or conventional loan? My credit score is good, and have enough money in bank to put more than 20% down, so how much longer, and what more do I have to do to qualify for home loan again?

    • Scott Schang says:

      Hi Laurie, and thank you for your question. I am SO glad that you found us. You are eligible for conventional financing NOW!

      I wish I could say that your story is unique, but there are literally thousands of comments on this article, many of which were misled by inexperienced loan officers and told they do not qualify when in fact they do.

      Your mortgage does not show up on your credit report because it was discharged in your bankruptcy. Yes, it is a public record, however, using conventional underwriting guidelines you are eligible to buy 4 years from the discharge of the bankruptcy and ignore the actual date of a foreclosure, short sale or deed in lieu that happened after the fact.

      If you would like, shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in. I can introduce you to someone that I know and trust that has extensive experience with these guidelines and can help you buy today.

      Hope this helps?

  • Jay says:

    If I have a bankruptcy chapter 7 discharged 2 years ago. Is there a way I can avoid mortgage insurance or minimize it.
    I was told. I cannot go conventional. I wanted to give 5% instead of 3.5% to avoid MI. Is there any alternative programs

    • Scott Schang says:

      Hi Jay, you actually WANT to pay mortgage insurance. I never understand why people think it’s a bad thing. Unless there was a mortgage included in the bankruptcy, FHA is your best option for buying at historic low interest rates 2 years after the discharge of a bankruptcy.

      The thing about mortgage insurance is that it’s required 100% of the time if you have less than 20% down payment. If a lender says you do not have mortgage insurance with less than 20% down payment, it’s rolled into the rate, which makes it permanent.

      Today, an FHA loan WITH mortgage insurance will still have a lower payment than a conventional loan with the same down payment.

      The great news is, you can buy a home at incredible terms today, then in 2 years (4 years from discharge), you have the option of refinancing into a Conventional loan while removing mortgage insurance completely as long as you have 20% equity at the time.

      If you would like an introduction to someone I know and trust and is experienced with these guidelines, just shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in.

      I hope this helps?

  • DOUGLAS CRABB says:

    Thank you Scott. my Chapter 7 date for dismissal was Sept. 07,2019. yes i just found out today about PortfoliomLoans. yes i need to talk to you more about this. yes i need to talk to whom ever these banks and credit unions do loans? I will wait for answer. Thank you scott for article .