Getting a Home Loan with Bad Credit – How long to wait?

Getting a Home Loan with Bad Credit – How long to wait?

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Below are the newest guidelines for Fannie Mae and Freddie Mac (Conventional Loans) which show how long you would have to wait to get a home loan after a “Bad Credit” event. 

Conventional loans are typically the best rates and terms available. There are other options if you don’t fit the rules below. Call me with your scenario. I can help!  949 -600-0944

Waiting Periods to get a Home Loan with Derogatory Credit

 (Effective September 2015)

FANNIE MAE FREDDIE MAC
Derogatory Event Waiting Period Requirements Waiting Period with Extenuating Circumstances Waiting Period Requirements Waiting Period with Extenuating Circumstances
Bankruptcy

Chapter 7 or 11

4 years 2 years Defined by Loan Prospector Automated Underwriting System Defined by Loan Prospector Automated Underwriting System
 

Bankruptcy

Chapter 13

·    2 years from discharge date

·    4 years from dismissal date

·    2 years from discharge date

·    2 years from dismissal date

Defined by Loan Prospector Automated Underwriting System Defined by Loan Prospector Automated Underwriting System
Multiple

Bankruptcy Filings

5 years if more than one filing within the

past 7 years

3 years from the most recent discharge or dismissal date Defined by Loan Prospector Automated Underwriting System Defined by Loan Prospector Automated Underwriting System
Foreclosure * 7 years 3 years

3 years up to 7 years:

·    90% maximum LTV ratios

·    Purchase, principal residence

·    Limited cash-out refi, all occupancy types

Defined by Loan Prospector Automated Underwriting System Defined by Loan Prospector Automated Underwriting System
Deed-in-Lieu

Preforeclosure

Sale (aka Short sale), or Charge-Off of Mortgage Account

·    4 years – **LTV ratios per the Eligibility Matrix 2 years – **LTV ratios per the Eligibility Matrix Defined by Loan Prospector Automated Underwriting System – see below for important information for Short Sales – new requirements effective 9-16-15. Defined by Loan Prospector Automated Underwriting System – see below for important information for Short Sales – new requirements effective 9-16-15.
  

(Effective October 2014)

 

Additional Fannie Mae Guidance:

*Note:

  1. New guidance allows a lender to use the bankruptcy waiting periods when:
  2. Both a bankruptcy and foreclosure are disclosed on the loan application, or credit report!
  3. Additional requirements apply; contact your loan officer for more specific details.
  4. Why is this important? This alleviates the different timing issues for when a bank finally forecloses on a property at some point in time after the borrower has filed bankruptcy and the mortgage debt was previously discharged.
  5. Borrower must have re-established traditional credit.
  6. If the lender cannot verify the debt was discharged in the bankruptcy, the lender must then use the greater of the bankruptcy or foreclosure waiting periods as defined in the chart above

**Note:

  1. LTV ratios also include and reference CLTV and HCLTV ratios.
  2. Maximum LTV’s are the lesser of the LTV ratios as reflected above, or the maximum LTV ratios for the transaction per theEligibility Matrix.

 

Freddie requirements for Short Sales:

 

Effective 9-16-15:  The information below needs to only be followed when Manually Underwriting a loan, otherwise follow the LP Accept parameters when a short sale has been identified on the borrower’s credit report.

 

If evidence of a short sale is disclosed on a credit report or contained elsewhere in the Mortgage file, the following waiting period must have expired:

  • 24 months from the completion date for extenuating circumstances or 48 months for financial mismanagement, the loan must be either:
  1. A purchase money loan on a Primary Residence with a maximum LTV, TLTV, or HTLTV of 90% or the lessor of the maximum permitted for the transaction, or
  2. A no cash-out mortgage, and
  3. The closed loan file must contain acceptable evidence of the completion of the significant derogatory event.

If you have any of the above credit issues and need to get a new home loan, there are other options available with great rates.

Call me with your scenarios to discuss – 949 -600-0944 

Jackie Barikhan

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