Buy Again After …
FHA Loans after Foreclosure, Short Sale or Bankruptcy
Getting an FHA loan after a foreclosure or short sale is one of the more common scenarios. People frequently ask, “Can I buy again after a foreclosure, short sale or bankruptcy?”
Here are the FHA guidelines related to bankruptcy, foreclosure and short sales:
Foreclosure
The waiting period to use an FHA loan to buy a home again after a foreclosure is 3 years. This is the same for a deed-in-lieu of foreclosure. An exception to the 3-year requirement can be granted if the foreclosure was the result of documented extenuating circumstances that were beyond your control, such as a serious illness or death of a wage earner, and you have re-established good credit since the foreclosure.
Short Sale
The waiting period to use an FHA loan to buy a home again after a short sale is 3 years if you were in default on his or her mortgage at the time of the short sale. An exception to the 3-year requirement can be granted if the foreclosure was the result of documented extenuating circumstances that were beyond your control, such as a serious illness or death of a wage earner, and you have re-established good credit since the foreclosure.
If you were current at the time of short sale, you are considered eligible for a new FHA mortgage if, from the date of the new mortgage application, all mortgage payments due on the prior mortgage were made within the month due for the 12-month period preceding the short sale, and all installment debt payments were made during the same period of time.
Chapter 7 Bankruptcy
The waiting period to use an FHA loan to buy a home again after a Chapter 7 bankruptcy is 2 years from the discharge date. During those two years, you are expected to have re-established good credit or chosen not to incur new credit obligations. An exception to reduce the waiting period to 12 months can be made if you can show that the bankruptcy was caused by extenuating circumstances beyond your control and you can show that you have since been able to manage your financial affairs in a responsible manner.
Chapter 13 Bankruptcy
You can use an FHA loan to buy a home again while in a Chapter 13 bankruptcy if you can show that 1 year has passed and you have made all your required payments on time under your plan. You must receive written permission from the bankruptcy court to enter into the new mortgage transaction.