Home buyers with negative credit events like a bankruptcy, short sale or foreclosure often have misconceptions about their ability to borrow again and the options that may be available to them.

Although these events do require a mandatory wait time (referred to as seasoning), there's a good chance the wait is shorter than you think.

Wait times to buy:

Chapter 7/11 Bankruptcy

• Conventiona l - 4 Years from discharge or dismissal date

• FHA - 2 Years from discharge or dismissal date

• VA - 2 Years from discharge date

• USDA -3 Years from discharge date

Chapter 13 Bankruptcy

• Conventional - 2 Years from discharge date or 4 years from dismissal date

• FHA - 12 Month history of payments made as agreed (with court approval)

• VA - 2 Month history of payments made as agreed (with court approval)

• USDA - 3 Years from discharge or dismissal and 12 months of payments (with court approval)

Foreclosure

• Conventional - 7 Years from completion date

• FHA - 3 Years from completion date

• VA - 2 Years from completion date

• USDA - 3 Years from completion date

Short Sale / Deed in Lieu

• Conventional - 4 Years from completion date

• FHA - 3 Years from completion date

• VA - 2 Years from completion date

• USDA – 3 Years from recorded date of Deed of Trust

In some cases, extenuating circumstances can be considered to reduce the required seasoning time. To be eligible, the borrower must have re-established credit for 2 years and will be required to provide documentation that the incident was not due to financial mismanagement.

Some examples of extenuating circumstances include the death of a primary wage earner, long-term illness or disability not covered by insurance and prolonged loss of employment for reasons beyond the borrower’s control (such as closing mergers).

The Boles Group at Bay Equity Home Loans in Gilbert helps buyers overcome derogatory credit events by reviewing the individual circumstances and creating a comprehensive short or long term home ownership plan.