If you have gone through a derogatory time in your past and have negative items on your credit and want to obtain a conventional loan, then you will need to the Conventional Loan Waiting Period for these different issues. There are different Conventional Loan Waiting Period requirements for the different derogatory items: bankruptcy, foreclosure, short sale, and deed in lieu of foreclosure. In terms of conventional loans, Fannie Mae and Freddie Mac are the two large government sponsored entities that create the rules and guidelines for Conventional Loans. The Conventional Loan Waiting Period after Chapter 7 Bankruptcy is 4 years from the discharge date. The Conventional Loan Waiting Period after Chapter 13 Bankruptcy is 2 years from the discharge date. After a foreclosure, the Conventional Loan Waiting Period is 7 years and you must make sure the property is transferred out of your name before the waiting period can begin. Finally, the Conventional Loan Waiting Period after a deed in lieu of foreclosure and a short sale is 4 years.
Aside from the Conventional Loan Waiting Period after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale, all conventional loan borrowers must meet the Conventional Loan Mortgage Guidelines. Within these guidelines are credit score, credit history, and debt to income ratios. With regards to your FICO credit score, you are going to need a minimum 620 FICO score in order to masss the minimum lending guidelines. Given this, the maximum debt to income ratio can only be 45%. What the debt to income ratio measures are your monthly debt obligations with your potential house payment divided by your gross monthly income. Conventional mortgage lenders also do not want to see any late payments after bankruptcy, foreclosure, or short sales. You need to show that the derogatory event happened and you are in a better place financially to where you can take care of and pay on all your debts. The only way you may get by with a late payment is if you have a good letter of explanation that explains the circumstances behind the late payment. This is where lenient lenders like myself come into play for the borrowing public. Since we can borrow to the minimum requirements of the Conventional Loan guidelines, we can also be lenient with late payments after derogatory events given the letter of explanation are spot on. So don’t make the mistake in going to a different lender where you will almost 100% of the time get a denial.
As you can see the Convention Loan Waiting Period after derogatory events cannot be changed and there are no exceptions given. After your derogatory event, you need to make sure you calculate the proper start time for the waiting period. In cases of bankruptcy, you need to make sure you start counting from the discharge date. For foreclosures you need to ensure the property gets transferred out of your name ASAP so that the waiting period can begin.
If you have gone through derogatory events in the past and are looking for a conventional loan, please don’t hesitate to reach out to myself and we can go over your history and see what we can do for you and when we can do it. I can be reached at 888-900-1020, email at email@example.com, or visit www.loanconsultants.org.