Buying A House After Foreclosure Will Require a Waiting Period
The Waiting Period for Buying a House After Foreclosure Varies by Loan Type
Buying a house after foreclosure will require a waiting period based on the type of loan being sought. In today’s Tucson Real Estate market, home buyers include individuals who may have lost a home to foreclosure some years ago. They have lived through the issues and are now ready to buy again. However, they may not know whether they can qualify for a mortgage at this time.
Can one start buying a house after foreclosure? The answer is “maybe”.
If you have been through a foreclosure, you’ve already been a homeowner. That is good news to lenders. Unfortunately, waiting periods are a common penalty for those interested in buying a house after foreclosure – the “rebound” buyers. But it’s not always clear how long the wait period will be since guidelines vary between lenders.
It is important to understand that the wait period for buying a house after foreclosure does not start until the foreclosure process is completed. Just moving out of the house or mailing the keys to the lender doesn’t start the clock.
Typical waiting periods for buying a house after foreclosure are:
| Buying A House After |
Convential Loan |
FHA Loan |
VA Loan |
USDA Rural Loan |
| Foreclosure | 7 Yrs From Completion Date |
3 Yrs From Completion Date |
2 Yrs From Completion Date |
3 Yrs From Completion Date |
| Short Sale | 4 Yrs With 5% Down |
3 Yrs From Completion Date [1] |
2 Yrs From Completion Date [1] |
3 Yrs From Completion Date |
| Deed In Lieu | 2 Yrs With 20% Down & Extenuating Circumstances 4 Yrs With 10% Down 7 Yrs Std Eligibility |
3 Yrs From Completion Date |
2 Yrs From Completion Date |
3 Yrs From Completion Date |
| Chapter 7 Bankruptcy |
4 Yrs From Discharge Or Dismissal Date [2] |
2 Yrs From Completion Date [2] |
2 Yrs From Discharge Date |
3 Yrs From Discharge Date |
| Chapter 13 Bankruptcy |
2 Yrs From Discharge Date 4 Yrs From Dismissal Date |
[3] | [3] | [3] |
The above information is from V.I.P. Mortgage Inc and deemed to be reliable. Ask your lender for their terms and conditions for loan approval.
There is More
It is worth noting that wait periods when buying a house after foreclosure might be shorter for portfolio loans. Portfolio loans are held on the books of the lender. Loans that are deemed “conforming” or “conventional” are usually sold to Fannie Mae and Freddie Mac. Conforming or conventional loans have more rigorous rules for acceptance.
If you are a rebound buyer and the only credit impairment was the foreclosure you may be able to restore your credit faster than buyers whose credit history contains other issues. Either way, buyers must “get their credit house in order,”
High current debt relative to income also can be a problem because lenders won’t approve a loan if the borrower’s debt-to-income ratio is over their guidelines.
Rebound buyers whose foreclosed loans were backed by the FHA or U.S. Department of Veterans Affairs should be aware of CAIVRS, a government-run database of government-guaranteed loan delinquencies. Borrowers whose unpaid government-insured debts are tracked in CAIVRS typically can’t get new government-backed debt.
Interested in buying a house after foreclosure in Tucson AZ, perhaps we can help!
Conclusion
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[1] Borrower can qualify with no waiting period if short sale was completed with no late payments & borrower has extenuating circumstances
[2] If Mortgage was included in BK, then use foreclosure wait period
[3] 1 year of the payout must elapse & payment performance must be satisfactory: buyer must receive permission from the court to enter into mortgage