If you’ve been through a short sale or foreclosure and are looking to get into another home, it’s the type of loan you get that determines how long you have to wait. Educate yourself and check out our quick breakdown of the wait periods after both short sales and foreclosures based on the type of loan you secure.

Are you eligible for the reduced wait period?

Defining extenuating circumstances

For the Fannie Mae and Freddie Mac loans there are reduced wait periods available under extenuating circumstances for foreclosures and short sales. What are these extenuating circumstances? Well there are a few but they’re more restrictive than you’d think. If you had a loss of job or a loss in the family you might be eligible. However things like divorce and general financial hardship do not apply.

To be eligible for the reduced wait period you must also have AUS (automated underwriting services) approval and a max LTV of 90%. Each loan has a specific LTV which specifies the percent of the home value a lender will lend to you as a borrower. For example with a 90% LTV loan on a home priced at $600,000, you could borrow up to $540,000 which is a requirement of at least 10% down payment.

Calculating your specific wait period:

Fannie Mae

Foreclosure: Calculated from the date the title was transferred out your name (the borrower) to the date the credit report is pulled on the new transaction.

Short Sale: Calculated from the date of competition of the short sale to the date credit report was pulled on new transaction.

Freddie Mac

Foreclosure: Calculated from the date the title transfers out of your name to the application date on the new transaction.

Short Sale: Calculated from date of completion of short sale to application date on new transaction.

FHA

Foreclosure: Calculated from the later of two dates – when the date title was transferred out of your name OR the date a claim was paid by FHA to underwriter’s approval date on a new transaction.

Short Sale: Calculated from the later of date of completion of short sale or date a claim was paid by FHA to underwriter’s approval date on new loan transaction.

USDA

Foreclosure: Calculated from the later of the date title transferred out of the borrower’s name or date a claim was paid by FHA to application date on new loan transaction.

Short sale: Calculated from date of completion of short sale to application date on new transaction.

VA

Foreclosure: Calculated from the date the title transferred out of your name to the note date on the new loan transaction.

Upcoming change for short sales

Previously buyers could qualify for a new home loan as little as 24 months (2 years) after a short sale however as of August 16, 2014 this early purchase program is being retired. That’s why we didn’t include this on our infographic above. The shortest wait period possible will now be 4 years, however the lending standards will be less strict. Buyers can qualify for conventional lending with a minimum credit score of 620 and 5% down payment.

If you have questions about your eligibility and when you qualify for a new mortgage after a short sale or foreclosure, contact a financial expert. Call (714) 785-4434 or email us and we’ll connect you with a professional to get you started on the road to homeownership once again.