1 Day Out of Short Sale, Bankruptcy, & Foreclosure Purchase and Refinance

10.  1 Day Out of Short Sale, Bankruptcy, & Foreclosure Purchase & Refinance

1 Day Out of Short Sale, Bankruptcy, & Foreclosure Purchase and Refinance

While at one point, declaring bankruptcy, being foreclosed upon, or doing a short sale of a property to avoid foreclosure meant that a person could not get another mortgage for at least several years (the FHA requires a three-year waiting period). Today you may find lenders that do offer loans to those one day out of a short sale or other unfortunate circumstance that may have led to losing their property or defaulting on their mortgage.


Getting a mortgage so soon after defaulting can be difficult, and the requirements and terms of the loan are likely to be much stricter than loans received under other circumstances. Every lender is going to have different regulations for these loans, of course, but here are some of the requirements you may see:

  • A minimum credit score between 600 and 650.
  • A larger down payment than with other mortgages – often as much as 20%.
  • A reserve of funds from which to make mortgage payments – often six months minimum.
  • The debt-to-income ratio may be stricter.
  • Borrowers may have to submit explanations as to why they defaulted on their previous mortgage or did a short sale and how, if at all, their financial circumstances will change.
  • The property will have to serve as the borrower’s primary residence.
  • The bankruptcy has to be done in correlation with a foreclosure or short sale. It cannot be a separate event.
  • The mortgage will most likely have a higher interest rate and may be either a fixed or an adjustable-rate mortgage. Again, this differs from lender to lender. Some require the mortgage to be a 5/1 or 7/1 adjustable-rate mortgage.
  • If the borrower had late mortgage payments prior to the sale or foreclosure, those missed payments must be explained. Some lenders will place a limit on how many missed payments the borrower could have had within the past 12 months.
  • Borrowers will need to provide all documentation for their income.
  • Those who have other blemishes on their credit may need to take steps to correct them, such as by paying off judgments or making accounts current, before lenders will consider giving them a new mortgage.

*The down payment associated with this offer is from the borrower’s funds (the borrower’s funds must be sourced and can include gift funds or funds from approved Down Payment Assistance program). The down payment cannot be from the lender credit or a seller credit. Restrictions apply, consult your Personal Mortgage Advisor for details.

All home lending products are subject to credit and property approval. Rates, program terms and conditions are subject to change without notice. Corporate NMLS Unique Identifier # 32416. Verify a mortgage company or individual license on the Nationwide Mortgage Licensing System Consumer Access site: www.nmlsconsumeraccess.org. The interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax-deductible for Federal income tax purposes: and the consumer should consult a tax advisor for further information regarding the deductibility of interest and charges. U.S. Dept. of Housing & Urban Development Mortgagee-FHA Lender ID # 23773-0000-0, 23773-00017 (Unconditional Direct Endorsement Approved), USDA SFHGLP Approved, Department of Veterans Affairs VA Automatic Lender 56997-00-00. Nations Lending Corporation®

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John Yurkovich

John Yurkovich

My name is John Yurkovich. I am a branch manager and licensed loan officer NMLS # 206495. I have a passion for helping people obtain the American Dream of homeownership. I work extremely hard in becoming an expert in the available loan program guidelines, analyzing credit reports and understanding our clients financial picture.

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