If you’ve experienced a major credit event such as a bankruptcy, foreclosure, deed in lieu of foreclosure, preforeclosure sale, short sale, or mortgage charge-off, you may still be able to qualify for a mortgage in the future. However, these events are considered significant credit issues and generally require a waiting period before you become eligible for a new home loan.
The required “seasoning period” varies depending on the type of loan and the specific credit event. During the mortgage approval process, the lender will review the circumstances surrounding the event and verify that enough time has passed since it occurred. They will also look for evidence that you have re-established a satisfactory credit history.
Every situation is unique, and the lender makes the final determination regarding eligibility. The standard waiting periods for the most common derogatory credit events are shown below:
| FORECLOSURE | DEED-IN-LIEU or SHORT SALE | CH. 7 or CH. 11 BANKRUPTCY | CH. 13 BANKRUPTCY | |
| FANNIE MAE | 7 Years from completion date | 4 Years from completion date for short sale | 4 Years from discharge or dismissal date | 2 Years from discharge date |
| 4 Years from completion date for deed-in-lieu | 4 Years from dismissal date | |||
| FREDDIE MAC | 7 Years from completion date | 4 Years from completion date for short sale | 4 Years from discharge or dismissal date | 2 Years from discharge date |
| 4 Years from completion date for deed-in-lieu | 4 Years from dismissal date | |||
| FHA | 3 Years from completion date | 3 Years from completion date | 2 Years from discharge date (see Timeline Notes below if you had a dismissal) | 1 Year of the payout period must elapse with perfect performance and buyer must receive permission from the court to enter into a mortgage |
| VA | 2 Years from completion date | 2 Years from completion date | 2 Years from discharge date (see Timeline Notes below if you had a dismissal) | 1 Year of the payout period must elapse with perfect payment performance and buyer must receive permission from the court to enter into a mortgage |
| USDA | 3 Years from completion date | 3 Years from completion date | 3 Years from discharge date (see Timeline Notes below if you had a dismissal) | 1 Year of the payout period must elapse with perfect payment performance and buyer must receive permission from the court to enter into a mortgage |
| JUMBO | Based on specific investor guidelines. | |||
Timeline Notes
- For FHA, VA, and USDA Loans: If your Chapter 7 or Chapter 11 Bankruptcy was dismissed, you might not have a waiting period restriction, but you will need to provide clear documentation to the underwriter showing that you have resolved or addressed the debts that caused the dismissal.
- Date of Event: The clock generally starts on the official completion date of the foreclosure, short sale, or deed-in-lieu.
- Bankruptcy Exemption: If your foreclosed mortgage was included in a Chapter 7 or Chapter 11 or Chapter 13 bankruptcy, some conventional guidelines allow the clock to begin from your bankruptcy discharge date, significantly shortening the wait time.
- Extenuating Circumstances: If you experienced a severe, documented hardship outside of your control (e.g., severe illness, sudden loss of employment), waiting periods can possibly be reduced, though you will be subject to stricter down payment requirements
- Multiple Bankruptcy Filings: If you have had multiple bankruptcy filings in the past 7 years, the waiting period increases to 5 years
