How soon can I buy a home after a (___________)?

A question many people ask or wonder about nowadays is “How long after a short sale/foreclosure/bankruptcy can I buy a home again”?  One important thing to keep in mind is none of those things exclude you from buying a home again, it’s only qualifying for a new mortgage after those which you might find some difficulty depending on your timeline.   There are several variables involved in answering that question depending on which situation you went through and the type of new mortgage for which you are applying.

Here in Arizona we have seen some of the biggest impacts from the real estate boom and bust, with values down to around 50-60% off peak levels, and large numbers of homeowners moving out of their homes over the last few years from either short sales, foreclosure, or bankruptcy.  For those who willing to consider dipping their feet back in the pool of homeownership, knowing the following timelines will be helpful when they decide the time is right again.  In general, foreclosures forces borrowers to wait the longest period, which is why for many people short sales can be an attractive alternative to foreclosure.  Extenuating circumstances like job loss, illness, or divorce can reduce the wait times.

This group of homebuyers are what some economists are calling “bounce back buyers”, and are starting to show up already in our real estate market, and likely to continue growing into a larger presence as we go through 2012.

For those considering applying for a new home loan and unsure on their eligibility it is best to talk with mortgage lender or broker who can take a detailed look at your situation and help you through the pre-qualification process.

Applying for a FHA Loan (3.5% down payment) with _______ in my past:

First you must re-establish good credit with 640 minimum credit score

Foreclosure

• Must wait 3 years to qualify for new loan from foreclosure sale date (trustee sale date in Arizona)
• Reduced wait if the borrower can show extenuating circumstances

Short Sale

• Can qualify for new loan right away if never went into default or missed mortgage payments
• Must wait 3 years if in default at closing of short sale
• Reduce wait if the borrower can show extenuating circumstances

Applying for a conventional Fannie Mae Loan with _______ in my past:

First you must re-establish good credit with 660 minimum credit score

Foreclosure

• 7 year period from the completion of foreclosure sale date for full eligibility (trustee sale date in Arizona)
• 3 year wait if borrower can show extenuating circumstances. Additional underwriting requirements apply for full 4 years after a 3 year waiting period.
• 7 year wait for a 2nd home, cash out re-financing, or an investment property

Short Sale

• 2 year wait if the borrower puts 20 % down payment
• 4 year wait if the borrower puts between 10% – 20% down payment
• 7 year wait if the borrower puts less than 10% down payment
• 2 year wait if the borrower can show extenuating circumstances and puts greater than 10% down payment

Foreclosure

• 7 year wait after the completed foreclosure sale date (trustee sale date in Arizona)
• 3 year wait if the borrower can show extenuating circumstances

Short Sale

• 4 year wait required before being able to qualify for a new loan
• 2 year wait if the borrower can show extenuating circumstances

Applying for a VA Loan (0% down payment) with _______ in my past:

Must re-establish good credit with 620 minimum credit score

Foreclosure

• 2 year wait after completed foreclosure sale date (trustee sale date in Arizona)

Short Sale

• 2 year wait after completion of short sale, unless it was a VA loan and then restrictions will apply
• Can qualify for new loan right away if never went into default or missed mortgage payments

Bankruptcy

• 2 year wait after bankruptcy discharged with a Chapter 7 bankruptcy
• 1 year wait after bankruptcy discharged with a Chapter 13 bankruptcy

Applying for a Jumbo Loan with _______ in my past:

• 7 year wait with a foreclosure, short sale, or bankruptcy in past