About North Carolina Real Estate


New Home Loan Waiting Periods After Bankruptcy, Short Sale, Foreclosure or Deed In Lieu of Foreclosure

Have you had a Bankruptcy, Foreclosure, Short Sale or Deed in Lieu of Foreclosure and are wondering how long you have to wait before you can obtain a new home loan?  Here are the guidelines as of Februrary 2011, which I verified with a loan officer friend. 

Of course, every rule is made to be broken and under the right circumstances of reestablished credit and an underwriter waiver/exception you may be able to qualify for a new home loan in less time than the general seasoning periods.  A seasoning period, in this case, is the mortgage industry term for waiting period.


Chapter 7- FHA & VA require two years seasoning. Conventional loans now require four years seasoning. If the bankruptcy has been discharged at least one year and less than two years, it is possible to obtain an FHA or VA mortgage. It must be documented that the bankruptcy was due to an extenuating circumstance. For example a loss of job, acts of nature, medical emergencies, etc. USDA Rural Development generally requires three years seasoning after discharge, but may make an exception before that with reestablished credit and an underwriter "waiver".                                                                     

Chapter 13- This type of filing indicates an effort to pay creditors. FHA and VA will allow borrowers to purchase a home after one year from the date of discharge if the payments have been made on time and their payment performance has been satisfactory. Conventional loans require 2 years from discharge date of 4 years from dismissal date.  USDA Rural Development generally requires three years seasoning after dismissal, but may make an exception before that with reestablished credit and an underwriter "waiver".       


Conventional and VA loans require two years minimum seasoning on a short sale.                               

FHA will allow borrowers to obtain a new mortgage after a short sale if: The borrower was current on their mortgage and other debts at the time of the short sale and proceeds from the short sale serve as payment in full.       

FHA will not allow borrowers to obtain a new mortgage after a short sale if: The borrower is taking advantage of a declining market or are purchasing a similar or superior property at a reduced price within commuting distance.                                                                                                               

♦ USDA Rural Development generally requires three years seasoning after discharge, but may make an exception before that with reestablished credit and an underwriter "waiver".    


FHA requires three years seasoning on a borrower with a previous foreclosure or deed -in-lieu of foreclosure. If extenuating circumstances can be documented exceptions can be granted.                       

Conventional loans now require a seven year time period from completion date.                                  

VA loans require a two year seasoning period before acquiring a new VA loan. If the foreclosure was on a VA loan then the applicant may not have full entitlement available for the new loan.                               

USDA Rural Development generally requires three years seasoning after discharge, but may make an exception before that with reestablished credit and an underwriter "waiver".       

Contact me anytime if I can help in any way.  I'd love to help you find your new home!

Cheryl Powell- The Powell Team- Remax Executive Realty

Comment balloon 35 commentsCheryl Powell - The Powell Team • February 21 2011 10:24AM


Cheryl - great information to have on hand. It's important for people to know that they can buy a house again in the future.

Posted by Kathy Smiley, Westlake Village, CA - "Making YOU Smile!" (Rodeo Realty ~ Fine Estates Westlake Village) about 8 years ago

Cheryl - great breakdown on this information. One suggestion, for lay people that might read this, you might want to define "seasoning".

Posted by Mike Saunders (Lanier Partners) about 8 years ago

Hello Kathy, you are right... everyone needs to have hope!

Hi Mike, that is a good idea... I added the definition of seasoning period as you suggested!

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (RE/MAX Executive - The Powell Team) about 8 years ago

Cheryl....many of these do make sense.  We need the conventional market to catch up.

Posted by William Feela, Realtor, Whispering Pines Realty 651-674-5999 No. (WHISPERING PINES REALTY) about 8 years ago

True William, but it seems that the conventional market is getting further behind the curve! Fannie Mae recently increased their seasoning period after foreclosure to 7 years!

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (RE/MAX Executive - The Powell Team) about 8 years ago

Good morning Cheryl.

That is a great post... Very informative.

Have a nice day.

Posted by Joshua Zargari, MJ Decorators Workshop (MJ Decorators Workshop LI staging and home decorating) about 8 years ago

Good information, Cheryl. I get questions like this everyday!  This a lot of misinformation out there.

Posted by Laura Giannotta, Your Realtor Down the Shore! (Keller Williams Realty - Atlantic Shore ) about 8 years ago

Hello Erik,  Do you work in the mortgage industry?  I don't know first hand who is right here regarding the Fannie Mae seasoning requirement following a Deed in Lieu, but I got my information from a loan officer who shared an internal list from their company.  I do know however, know that Fannie Mae has recently made their seasoning requirements more strict.

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (RE/MAX Executive - The Powell Team) about 8 years ago

Thanks Joshua and Laura, I'm glad that you found the information helpful.  My own need for this information is the reason I did the research, so I thought I'd share my findings with others.  :-)

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (RE/MAX Executive - The Powell Team) about 8 years ago

A lot of folks think that after a foreclosure or short sale they have to wait 10 years... Thanks for the post.

Posted by Sheila Newton Team Anderson & Greenville SC, Selling the Upstate since 1989 (Berkshire Hathaway HomeServices - C. Dan Joyner) about 8 years ago

Hi Cheryl,

Thanks for the breakdown.  I wasn't sure of a few of the timeframes.  But anyone who went through one of these, should wait a bit before plunging back into home ownership.


Posted by The Scott Loper Team Bux-Mont Premier Properties (Keller Williams Real Estate - Montgomeryville) about 8 years ago

Cheryl, This is a great comprehensive guide for buyers, outlining home loan waiting periods.  Love the information!

Posted by Sandy Shores FL Realtor®, Melbourne Real Estate, Brevard County Real Estate, Florida's Space Coast (M & M Realty of Brevard Inc.) about 8 years ago

Cheryl, thank you for sharing this information.  Obviously there is no "one fits all" solution, no wonder are confused!

Posted by Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES, Florida Waterfront and Country Club Living (Tropic Shores Realty - Ich spreche Deutsch!) about 8 years ago

Cheryl,  This is great information.  Do you happen to know if the interest rates are higher for those who have any of the examples you provide.  Or, if the credit score is restored to 720 or above does it not make a difference on the interest rate? 

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) almost 7 years ago

Hello Kathleen,  In my experience these buyers don't pay a higher interest rate once the required seasoning period has passed.  Their current credit score is the key to the interest rate on their new mortgage.  You may want speak with a mortgage loan officer about it though, since these guidelines change constantly!  Thanks for your comments.

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (RE/MAX Executive - The Powell Team) almost 7 years ago

Both my wife and I had financial problems in 2008 because we had a big mortgage and my wife was laid off. Due to that, our credit suffered greatly and we went into default with our mortgage. I had credit collectors calling me non stop, even at work. I am employed by a government agency and am out on the field most of the time and these credit collectors were constantly calling my superiors and leaving nasty messages that I was contemplating filing bankruptcy. My house went into foreclosure and my wife and I went into a rental. It was very difficult to have a management company to accept us due to our credit so we ended up renting a mobile home from an elderly lady. Last year we started to look for homes and found one we liked. I called a mortgage company and applied for a loan and was rejected because they told me my 3 year waiting period is not up. I told my wife that we had to wait another year. Then, my realtor called me and told me to contact Gustan Cho. Gustan Cho is a mortgage broker who has offices in Florida and Illinois. My realtor, Scott Johnson from Remax told me that Gustan Cho has helped people with really bad credit get loans and Gustan Cho just got a loan for one of his associates clients in Financing a Condotel in Hollywood, Florida. Scott told me that no lender in this country finances condo hotel loans and was really surprised that Gustan Cho was able to do so for his associates Hollywood, Florida condotel.

Skeptically, I contacted Gustan Cho through his website, GustanCho.com and spoke to him. The first thing he wanted was the paperwork by the county stating when the sheriff sale was or when the deed was transferred to the lender. That was no problem because my other loan officer, Mike, asked the same thing. I emailed Gustan Cho what he requested and he told me that I was in luck. I did not believe Gustan Cho at first but he swore to me that the foreclosure was a non issue but I still needed to qualify for the mortgage. Gustan Cho told me to go to GustanCho.com and apply online. My wife, Kate and I applied online and filled out the application. Within an hour or so after we submitted our application, Gustan Cho contacted Kate and told her we were preapproved and told us what the rate and term was for a $250,000 FHA loan. He then sent us our application to sign and we submitted all of our documents along with a real estate contract. We closed on our home exactly one month after submitting all of the documents to Gustan Cho. It has been almost a year since we are proud homeowners thanks to Gustan Cho.

Why did Gustan Cho get us a home loan when the other mortgage broker could not? The first mortgage broker was incompetent. Mike, the other broker (I will not use his last name or mortgage company because I think he was a newer loan officer and do not want to slander the kid or his company) did not read the foreclosure certificate correctly. The certificate drafted by the Broward County Circuit Court Clerk had two dates. One date was the date of the certificate of title and the other date, dated one year later, was the date of when my foreclosed loan was sold to Fannie Mae. Mike used the date the loan was sold to Fannie Mae and not the date of the certificate of title. Bottom line is that you as a borrower need to check with a competent loan officer like Gustan Cho. For us, it was a case of bad luck but got lucky because of our realtor Scott.

Posted by T. Grey over 6 years ago

I had a client who wanted to buy a home in Arizona, but he had a foreclosure.  After researching the web I found a loan program at www.cfsflex.com, they allow a mortgage after a foreclosure.  There is no waiting period.  Good to see lending options coming back.

Posted by Terri Club about 6 years ago

WOW, that is great Terri.  Thanks for sharing this program with us.  Although most people who just lost their home to short sale or foreclosure wouldn't have 25% downpayment and 6 months of payment reserves left after funds needed for closing, it could work for some people.

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (RE/MAX Executive - The Powell Team) about 6 years ago

My wife and I have a Chapter 7 now discharged for 2 years. We rolled the house into the BK beofre ever going into FC and moved out of the house before house ever went into FC. I understand FHA is 2 years for BK and 3 years for FC. However, I have talked to my attorney on several occasions and he is very addiment that it is not considered a FC since it was dismissed at time of discharge. Please help clarify if this is considered a foreclosure or just a BK. Will lenders look at this as a BK or FC? We want to purchase a new home and it is now at the 2 years mark since BK discharge. If lenders look at this as a FC it will be about 2.5 more years, which is insane. 

Posted by Mark over 5 years ago

Bookmarked and Suggested !!! Pls. View our RELO message -  http://actvra.in/4jHG 

Posted by Michael J. Perry, Lancaster, PA Relo Specialist (KW Elite ) almost 5 years ago

These time lines are sure to come in handy. I met a buyer over the weekend who had a SS in 2009 and thought he needed to wait 10 years. I informed him of his mistake and we are now looking for a home.

Posted by Les & Sarah Oswald, Broker, Realtor and Investor (Realty One Group) over 4 years ago

Cheryl: Good information here in your blog. Still, many of the 'calls' on whether to extend credit is up to the determination of the specific lender in formerly distressed buyer scenarios. Then once the buyer secures a credit approval letter, and a contract ona target home is ratified, the dreaded underwriters!

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (HomeSmart Realty West & Geneva Financial, Llc.) over 4 years ago



For FHA it will be 3 years after the transfer date of title.


For conventional it will be 4 years after the discharge of the BKl, you will need to document the mortgage was included in the BK.



Posted by Tony Garcia, Sr. Mortgage Loan Officer since 2001 (Homeside Financial, LLC) over 4 years ago


The new waiting period after short sale is now 4 years on conventional loans, with no LTV restrictions.


VA technically doesn't have a waiting period (for short sales), most lenders have an overlay that require 2 years.

Posted by Tony Garcia, Sr. Mortgage Loan Officer since 2001 (Homeside Financial, LLC) over 4 years ago

Great information!

I knew that as of August 16 Fannie Mae requires a 4 year waiting period after a short sale( the buydown LTV's have been eliminated).

But there is much more to it.

Boomerang buyers are back into the market. Hopefully, they will learn from their experience.

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Calabasas CA (Barcode Properties) over 4 years ago

Great information.  Some of the stuff is more Lender overlays.

Posted by Lisa Perry - NMLS # 276329, Northern VA - 80/15/5, 100% Loans - Jumbo Loans (FHA, VA, Jumbo, Downpayment Assistance, Conv.) over 4 years ago

Thanks everyone for commenting.  I originally posted this in February 2011, so some of the information is outdated.  These guidelines were supposed to be the standard guidelines, with lender overlays varying between lenders.

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (RE/MAX Executive - The Powell Team) over 4 years ago

I always keep the chart handy as that is a frequently asked question.

Posted by Jeff Jensen (The Federal Savings Bank/Lending in 50 states) over 4 years ago

Glad you noted the original blog was in 2011. So much keeps changing, I always refer the client to a mortgage broker to be sure. But like Jeff Jensen I like having a chart handy.

Posted by Kathleen Luiten, Kauai Luxury Ocean Home Sales (Resort and Second-Home Specialist) over 4 years ago

Great information Cheryl!  I thing many individuals may be surprised with these time frames.  I have heard many people express a feeling that due to past issues they will never own a home again.  

Posted by Karen Mathers - Vero Beach FL, When it Matters, Choose Mathers! 772-532-3221 (Keller Williams Vero Beach) over 4 years ago

Good Blog Cheryl, also some good comments here.


Posted by Scott Gleason, Westfield NJ New Homes Specialist (RE/MAX Select) over 4 years ago

Just wanted to share that I spoke with VA today and they do make some exceptions to the 2 year rule. This is due to the current environment.

Posted by Michael Williams about 4 years ago
As a veteran or active duty service member, you’re entitled to a variety of exclusive benefits that are created to both protect and help you – from helping with your health benefits to understanding your finances. However, even the most responsible and conscientious homeowner can be faced with difficult financial issues that require them to file for bankruptcy.


When faced with this harsh reality, many service members worry that filing for bankruptcy will keep them from ever using their VA home loan benefits again. But that can’t be further from the truth. You can absolutely get a home with a VA loan if you’ve applied for bankruptcy in the past – it’s just a matter of understanding the process.


Once you receive a discharge date from bankruptcy, you can expect to wait at least two years before being eligible for your home loan benefits. It’s important to note that it’s not two years from the date you filed, but two years from your discharge date.  


Sometimes, the Department of Veterans Affairs will provide an exception to allow for using your VA loan benefits sooner.  This could be something as simple as proving that the bankruptcy was out of your control (i.e. death, sickness or divorce causing a loss of income) to showing the lender court-approved payments made on a regular basis along with a VA-approved reason for bankruptcy.
Posted by carrie dia about 4 years ago

if the home was part of BK then the seasoning of the foreclsoure ends with BK on conventional loans .
contact me direct for any info you might need on any types of loans, jumbo / conventional /va or FHA . we are a direct lender and will give home loans to people who had a foreclsoure yesterday ... we have no seasoning requirment as long as the fico is 670 and you have 20 percent down .
Mr Johnson i read your blog right above .. its not good to lead people on and make them think that you can lend at 3% ... there is no 3% in the market especially with bad credit. To raise any ones hope just to get them to call you and then sell them some thing else is called 'bait and switch .... honest good lenders do not indulge in these practices .

Posted by khadija mirza about 4 years ago

Wow! Nice article.
NJ FHA home loans

Posted by Mabel almost 4 years ago