Challenges For Buyers With Bad Credit

Guidelines for buyers: Lenders have strict guidelines for borrowers who’ve been through a short sale or foreclosure or who have walked away from their mortgage.  But even these homeowners can apply for a new loan after a waiting period of 2 to 7 years depending on the buyer’s circumstances and reestablished credit history. 

A two-year wait applies to buyers who completed a short sale and want to obtain a loan insured by the Federal Housing Administration, while the seven-year wait applies to buyers who deliberately defaulted on a mortgage despite an ability to make the payments and want to get a loan that can be sold to Fannie Mae.  Fannie Mae also allows buyers who completed a short sale or signed a deed-in-lieu of foreclosure and have a 20-percent down payment to obtain a loan after only two years.  If the down payment is 10 percent, the waiting period is four years.

The most important thing is to show good credit after the short sale/foreclosure.