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Getting a Mortgage After Bankruptcy - New 4 Year Rule

08-18-2014About MortgagesEddie Knoell

In Short: As of August 12, 2014 borrowers who had a past mortgage included in a past Chapter 7 bankruptcy, the borrower only has to wait 4 years from the date of the discharged bankruptcy to get a new conventional loan… you no longer have to wait 7 years!

That’s right, borrowers who want to get a conventional mortgage no longer have to wait 7 years if they put their mortgage into a past Chapter 7 bankruptcy. The fact that buyers do not have to wait 7 years after the foreclosure is a really big deal. Many valley home owners had their mortgage foreclosures put into their bankruptcy. It is estimated that 20% of homeowners who filed bankruptcies put their mortgage debt into the bankruptcy.

What are the waiting times for getting a home loan after bankruptcy, foreclosure, and short-sale?

Seasoning Requirements for Conventional Loans:

  • Chapter 7 – is a 4 year waiting period
  • Chapter 13 – is a 2 year waiting period
  • Foreclosure – is a 7 year waiting period
  • Foreclosure that is put into a Chapter 7 bankruptcy – 4 year waiting period!! this is new as of August 12th 2014
  • Short-sale – is a 2 year waiting period

Seasoning Requirements for FHA Loans:

  • Chapter 7 – is a 2 year waiting period
  • Chapter 13 – is a 1 year waiting period with on-time payment history on chapter 13 terms
  • Foreclosure – is a 3 year waiting period
  • Short-sale – is a 3 year waiting period

Seasoning Requirements for VA Loans:

  • Chapter 7 – is a 2 year waiting period
  • Chapter 13 – is a 1 year waiting period with on-time payment history on chapter 13 terms
  • Foreclosure – is a 2 year waiting period
  • Short-sale – is a 2 year waiting period

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