I met yesterday with one of my favorite lenders, Brad Brockett at Summit Funding, and we were chatting about life after a short sale or foreclosure. I was pleased to hear that the timeline isn’t nearly as dire as I thought it would be. Here’s the breakout as it currently stands with today’s underwriters:

Life after a Short Sale or Foreclosure

• The general rule of thumb – for FHA guidelines –  is a waiting period of 3 years after a short sale or foreclosure before the buyer can purchase a primary residence.
• This time period can possibly be reduced by 1 year due to events such as a major illness or job loss. Divorce and reduced work hours don’t typically count towards this reduction.
• Buyer needs a minimum of a 640 credit score…a 620-640 may be possible but the lender may broker the loan to a different company.
• If the buyer is using a down payment assistance program, the lender will likely require a minimum of a 640 credit score.
• These requirements could qualify you for FHA financing. Conventional loans would likely require a 5 year waiting period to qualify.

Life after a Bankruptcy

• The general rule of thumb – for FHA guidelines –  is a waiting period of 2 years after the discharge of a bankruptcy before the buyer can purchase a primary residence.
• The other requirements are similar to the short sale/foreclosure guidelines above.

As you can see, there will probably be many buyers coming up in the future who will soon qualify to buy again! If you’re interested in talking with a mortgage lender about your qualifications, check out my “vendor” page for some great references! These lenders can help you through the mortgage process…once you are pre-approved and ready to look at homes, I’m here to help! Good luck!