How Long Do You Have to Wait to Get a Mortgage After a Short Sale or Foreclosure?

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Times Have Changed
For 15 years, I have originated mortgages for people. For the first thirteen of those years, nobody ever asked me what happens if they stop making their mortgage payments. The issue of foreclosure was so taboo, that it wasn’t even brought up in a joking manner. The idea that someone wouldn’t couldn’t meet their obligations was scorned by everyone. Then, about 2 years ago, all that changed.

Now I have past clients, friends, and acquaintances asking me what happens if their mortgage goes into default. There is no “beating around the bush.” Everyone gets straight to the point. There is no taboo.

Investors Make the Rules, Not HUD
It is difficult to find information about the future mortgage impacts of the decisions you make today. This is due, in no small part, to HUD’s (US Department of Housing and Urban Development) lack of documentation on the subject. Many of the rules fall to the individual investors to interpret, and they certainly don’t publish their guidelines for public consumption.

If you, or someone you know find yourself in a situation where you might lose your home – do not despair! Time heals all credit wounds. Just remember, keep your credit clean after any of these events. Everything in the mortgage world is credit score driven, and the minimum score for FHA currently is 620.  

Here is a basic list of FHA investor guidelines from most of the banks we deal with. This list assumes good credit history after the event, and otherwise standard qualification.

How Long Until You Can Get a Mortgage? 

What Happened?	*How Long Until you can Get a Mortgage?
Foreclosure	3 Years
Deed-In-Lieu of Foreclosure	3 Years
Short Sale with Good Payment History	2 Years
Short Sale with Late Payments	3 Years
Bankruptcy	2 Years from Discharge

*FHA only. FNMA/FHLMC guidelines much more strict. Generally 5 years minimum time.

What Would You Like to Know?
Accurate mortgage information is often hard to find. What would you like to know? Please leave your questions in the comment section!