Home buyers and homeowners with negative credit events like a bankruptcy, short sale or foreclosure often have misconceptions about their ability to borrow again and the options that may be available to them.

Although these events do require a mandatory wait time (referred to as seasoning), there's a good chance the wait is shorter than you think.

CARES Act Forbearance (COVID-19 Relief)

• Loan must be reinstated


• Loan must be current


• Borrower has made three consecutive timely payments

Chapter 7/11 Bankruptcy

• Conventional - 4 Years from discharge or dismissal date


• FHA - 2 Years from discharge or dismissal date


• VA - 2 Years from discharge date


• USDA -3 Years from discharge date

Chapter 13 Bankruptcy

• Conventional - 2 Years from discharge date or 4 years from dismissal date


• FHA - 12 Month history of payments made as agreed (with court approval)


• VA - 2 Month history of payments made as agreed (with court approval)


• USDA - 3 Years from discharge or dismissal and 12 months of payments (with court approval)

Foreclosure

• Conventional - 7 Years from completion date or 3 years if additional criteria are met


• FHA - 3 Years from completion date


• VA - 2 Years from completion date


• USDA - 3 Years from completion date

Short Sale / Deed in Lieu

• Conventional - 4 Years from completion date


• FHA - 3 Years from completion date


• VA - 2 Years from completion date (5 years in cases with a high balance)


• USDA – 3 Years from recorded date of Deed of Trust

In some cases, extenuating circumstances can be considered to reduce the required seasoning time. To be eligible the borrower must have re-established credit for 2 years and will be required to provide documentation that the incident was not due to financial mismanagement. Some examples of extenuating circumstances include the death of a primary wage earner, long-term illness or disability not covered by insurance and prolonged loss of employment for reasons beyond the borrower’s control.