We all know that we are coming out of a tough economic environment. And tough economic environments cause tough credit situations for a lot of folks.
I run across many good people who through no fault of their own have run into financial hardship but want to purchase a new home. Many are amazed at how quickly they can qualify to purchase a new home provided they re-establish credit and don’t have any further credit problems.
Here is a quick GUIDE to the various loan programs and the waiting periods for the various credit issues:
(Conventional Loans are loans the conform to Fannie Mae and/or Freddie Mac Guidelines)
- Foreclosure: 7 year from the date the foreclosure was completed (or, 3 years from the foreclosure date with extenuating circumstances and with 10% down payment.).
- Short Sale:
- 7 years from the date the sale was closed and the title transferred to the new owner for less than 10% down payment.
- 4 years from the date the sale was closed and transferred to the new owner with 10% or greater down payment.
- 2 years form the date the sale was closed and transferred to the new owner with 20% down payment.
- Chapter 7 Bankruptcy: 4 years from the discharge date. 2 years with extenuating circumstances.
- Chapter 13 Bankruptcy: 2 years from the discharged date. 4 years from the dismissal date.
- Forclosure (or Deed in Lieu of Foreclosure): 3 years from the date of the foreclosure, with re-established credit.
- Short Sale: 3 years from the date of the closed sale when the deed transferred to the new owner.
- Chapter 7 Bankruptcy: 2 years from the date of the discharge of the bankruptcy.
- Chapter 13 Bankruptcy: 1 year after the payout period has begun, so long as everything has been paid on time, and with court approval.
- Foreclosure: 2 years from the date the foreclosure was complete.
- Other Circumstances: All other derogatory credit situations mirror the time-frames of an FHA loan.
USDA Rural Housing
- Chapter 7 Bankruptcy: 3 years from the discharge date.
- Other Circimstances: All other derogatory credit situations mirror the time-frames an an FHA loan.
All of these rules allow for shorter time periods from the derogatory event, given ‘extenuating circumstances’, such as extended job loss, death of a primary wage earner, etc. Extenuating circumstance will require some documentation about the circumstances.
The good thing here is that many, many people think that a bankruptcy or a foreclosure will damage your credit for great lengths of time, if not forever. That, I am happy to say, could not be further from the truth. If you or someone you know has gone through a major derogatory credit event, then I would be happy to help you rebuild and get ready to buy a home when the time comes.