If you have gone through or are considering going through a foreclosure, short sale, or bankruptcy, NOW is the time to start getting your credit back in order. Although it seems like a long time away, there are steps to take in preparation for your next home.
Buy Home After Bankruptcy (Chapter 7)
How long will you have to wait on buying a home after filing for Chapter 7? It depends on the loan type and other factors, with ranges between 2-years and 4-years from the discharge date.
- Fannie Mae: 4 years from Discharge Date
- FHA: 2 years from Discharge Date
- VA: 2 years from Discharge Date
- USDA Rural: 3 years from Discharge Date
Buy Home After Bankruptcy (Chapter 13)
How long will you have to wait on buying a home after filing for Chapter 13? It ranges between 1-year and 4-years depending on the loan type.
- Fannie Mae: 2 years from Discharge Date (4 years from Dismissal)
- FHA: 1 year of the payout must elapse & payment performance must be satisfactory. Buyer must receive permission from the court to enter into a mortgage.
- VA: 1 year of the payout must elapse & payment performance must be satisfactory. Buyer must receive permission from the court to enter into a mortgage.
- USDA Rural: 1 year from completion
Buy Home After Foreclosure
How long will you have to wait on buying a home after a foreclosure on your previous home? It depends on the loan type and ranges between 2-years and 7-years from the Trust Deed date.
- Fannie Mae: 7 years from Trust Deed date
- FHA: 3 years from Trust Deed date
- VA: 2 years from Trust Deed date
- USDA Rural: 3 years from Trust Deed date
Buy Home After Short Sale
How long will you have to wait on buying a home after a short sale on your previous house? It depends on the loan type and other factors, with ranges between 0-days and 7-years.
- Fannie Mae (w/ a max of 80% LTV): 2 years
- Fannie Mae (w/ a max of 90% LTV): 4 years
- Fannie Mae (w/ max LTV): 7 years
- FHA: 3 years from completion date (can re-enter market if short sale is sold with NO mortgage delinquencies)
- VA: 2 years from Trust Deed date (can immediately re-enter market if short sale is sold with NO mortgage delinquencies)
- USDA Rural: 3 years from completion date
Click here to download the printable PDF
Guest author: Jon Tobias of the Tobias Team @ Nova Home Loans.
{ 1 comment… read it below or add one }
Yes, even if you have declared personal bankruptcy, you may still qualify for a mortgage . Generally, if you apply for a mortgage after bankruptcy, lenders will require you to start re-establishing your credit before they will grant you a mortgage. In addition, before approving a mortgage to persons with bad credit, mortgage brokers will make sure that they qualify for the mortgage.
Here’s how you can qualify for a mortgage after bankruptcy:
First, once you are discharged, start saving money. You will need a down payment to buy your house.
Second, re-establish your bad credit – mortgages are much easier to obtain with a good credit history. The easiest way to do this is with a secured visa card. You deposit $1,000 with the credit card company, and they give you a credit card with a $1,000 limit. The credit card shows up on your credit report as a normal credit card; you have started to re-establish your credit.
Third, you should consider using some of your savings to invest in an RRSP. If you are a first time home buyer in Canada, you can borrow up to $20,000 from your RRSP to use as a down payment on your new home. Since contributions to an RRSP generate a larger tax refund, you can use your tax refund to grow your nest egg even faster. It’s a great way to build up a down payment, because you are using some of the government’s money to do it!
Fourth, be realistic in your goals. Start with a small house, and work your way up from there.
Finally, to find out if you qualify for a mortgage after bankruptcy, contact a Mortgage Broker. He/she can also tell you how large a mortgage you can obtain. Good luck with your new house!