ReCasa Financial Blog

In 2015, the first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home.

As of August 2014, new changes were made to the mortgage waiting period for foreclosures and short sales for specific situations.

Conventional Loans

  • Foreclosures: 7 years from the foreclosure completion date (some applicants may qualify for a conventional loan only 3 years after with extenuating conditions including wage earner death, illness or job loss)
  • Short Sale/Deed in Lieu-Short Sale:
    • 7 year with less than 10% down of primary residence
    • 4 years with 10% down on the purchase of a primary residence
    • 4 years with 20% down on the purchase of a primary, secondary or investment property purchase
    • 2 years with extenuating circumstances, only with 20% down

FHA Loans

  • Foreclosures: 3 years from the foreclosure completion date and transferred back to the lender to the credit report date
  • Short Sale: 3 years from the title transfer date

Department of Veterans Affairs Loans

  • Foreclosure: 2 years from foreclosure completion date and date transferred back to the lender
  • Short Sale: 2 years from previous sale closed date and new owner transfer date

For additional information regarding specific waiting periods for conventional, FHA and/or Department of Veterans Affair loans, visit New Changes to Mortgage Waiting Period.

This is great news for the housing market and real estate investors .  More homebuyers should be ready to purchase over the next 8 years as they slowly come out of the foreclosure or short term window.  These “boomerang” homebuyers are characterized as being Generation X (35-44 year olds) and Baby Boomers.  As investors, it is important to keep the home buying audience in mind to make the property rehab decisions.

How are you preparing for these “ boomerang ” homebuyers ?

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