Home Loans after Bankruptcy, Short Sales & Foreclosures

foreclosure-48120_1280Financial hardships happen. At Federal Home Loan Centers, we don’t judge you on why they occurred. What we want is to get you that second chance at home ownership you’ve been waiting for, after learning a hard lesson.

Federal home loans from the USDA, VA and FHA are surprisingly lenient on applying again after incidents such as bankruptcies, short sales and foreclosures. This piece will focus on the difference and hopefully give you the relief you’ve been looking for!


Circumstances such as medical debt, prolonged unemployment, and other issues can force us to ask the American judicial system for debt relief via bankruptcy. Your options for getting a federal home loan after these events are far more optimistic than a conventional loan. We will skip Chapter 11 information, since individuals rarely file for it, unless it’s in regards to a business.

For Chapter 7 bankruptcies, your wait times will vary on eligibility for another home loan. You’ll wait two years for the VA home loan, two years for the FHA home loan, and three years for the USDA home loan, unless you are able to prove extenuating circumstances and have this wait time shaved down to two years. A conventional loan will leave you with a four year waiting time, unless you can prove qualifying situations.

For Chapter 13 bankruptcies, it will coincidentally be 13 months after filing with on time payments for the VA, FHA, and USDA home loan programs. With the FHA, you can try to qualify for their Back to Work program, which can bring that wait time down. A conventional loan will have you wait two to four years.


Many consumers pursue short sales when they owe more on the home than is fair market value or they can’t afford mortgage payments any longer. This option is less damaging than a foreclosure, as it shows the lender you made the effort to make their loss less substantial.

Typical waiting time for the USDA and FHA home loan is three years after a short sale. This is unless you qualify for the previously mentioned FHA Back to Work program.

The VA is the most lenient, as they will allow you to get your next VA home loan immediately after the short sale, AKA compromise sale, is over. The catch is that you have to have been current on all your payments before the sale closed, or otherwise, the typical waiting time with most lenders is two years. Conventional loans will have you waiting for four years after the short sale ended.


A foreclosure is a very traumatizing event for anyone. To realize you can no longer afford mortgage payments is terrible. Sometimes, it isn’t even a matter of the consumer giving up, as they will pursue a short sale and it just doesn’t end up happening.

For a conventional home loan, you will need to wait a staggering seven years after the foreclosure. If you go through the lengthy and emotionally draining process of proving extenuating circumstances, you may be able to lower this waiting time to three years.

The great news is that for federal home loans, it is automatically three years with the USDA home loan. It will be three years with the FHA, unless you qualify for the Back to Work program. The VA is the most understanding, with their wait time planted firmly at two years.

Let us help you to see if you qualify to try for home ownership. We work with clients who have suffered financial adversities, have low credit scores, or need to conduct short sales. Call 877-432-5626(LOAN) or tweet us at @fedhomeloan.

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