How long must buyers wait before obtaining mortgage financing after a foreclosure?

Keep in mind, extenuating circumstances may apply. You always need to discuss your specific situation with your mortgage lender. I always recommend Arizona buyers contact Senior Loan Officer, Cheryl Barber, at 520-560-2109 for a free consultation on qualifying for a mortgage loan. Her background in financial services and mortgage lending since the early 1980’s along with her good natured personality is a guarantee you have someone that will not only give you the harsh reality, if need be, she always has your best interest in mind. She has proved that to me through my clients and family since I gave her a chance in 2006.

So, here are the facts:

On a conventional loan – 7 years from completion date. However, if you are able to prove the foreclosure was due to extenuating circumstances, you may eligible for reduced seasoning time to 3 years so long as you have re-established credit for 2 years and provide a letter of explanation and documentation evidencing the incident was not due to a financial mismanagement. Acceptable situations include:

• Death of primary wage earner
• Long-term illness or disability not covered by insurance
• Prolonged loss of employment for reasons beyond the borrower’s control (such as closing mergers)

Additional requirements after a foreclosure 3 years and up to 7 years include:

• Less of 90% Loan To Value or maximum LTV/CLTV matrix
• Purchase owner occupied only
• Rate/Term: All occupancies

On an FHA loan – >12mos. and <24mos. discharged with pay history provided from the trustee. 24 months discharged is ok. 1 year of the payout must have elapsed and payments made on time. Borrower MUST receive permission from the courts to enter into a mortgage agreement. 

On a USDA Rural loan – >12mos. and <24mos. discharged with pay history provided from the trustee. 24 months discharged is ok. 1 year of the payout must have elapsed and payments made on time. Borrower MUST receive permission from the courts to enter into a mortgage agreement.

On a VA loan – Documentation of the debt restructure will be required along with acceptable 12 month payment history of the debts included in the bankruptcy. You will need documentation of the court’s permission to proceed. The Automated Underwriting System may also request additional requirements.

Contact Senior Loan Officer, Cheryl Barber, at 520-560-2109 for a free consultation on qualifying for a mortgage loan.