How long must I wait?

Over the past week I have been meeting with many clients who are looking to rent a home. Several of them experienced either bankruptcy or a short sale due to a variety of mitigating circumstances including divorce or significant medical bills for a loved one. What has been great to hear is that after just eighteen months, many of their credit scores have “rebounded” and are in an area where landlords have been favorable to their applications, and they are well positioned for a purchase in as little as two years. Let me use an example:

Joe has a small business and after several unprofitable quarters, he finally decides that he has to file for personal bankruptcy. His attorney advises him that he should file Chapter 7, and he receives a discharge from his bankruptcy in August of 2013. As of August of 2015, Joe would qualify (assuming that his credit scores have improved with a good payment history over the period) for a new FHA insured mortgage.

And, while it is a bit longer to “recover” from a short sale or a foreclosure, many renters can qualify for the purchase of a new house with an FHA insured loan within no more than three years and get back to being a homeowner. In summary, the numbers break down as follows:

One Year

You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy.

Two Years

You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.

Three Years

You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a foreclosure for now. All of these programs require a minimum credit score of 640 to qualify.

VA (Veterans Administration)

Veterans Administration loans follow the same criteria for bankruptcies, but if you qualify for a VA insured loan (military history), then you can apply in as early as two years after a short sale or foreclosure. All of the VA programs require a minimum credit score of 620.

With the improving economy and job market, plus the benefit of these programs, we think this year is going to be a strong one for real estate. We are already seeing the interest in Loudoun County with heavy sales and rental activity and we expect it to continue. If you have reached one of these thresholds, let me know how I can help. I would love to earn your business!


Interested in a Home in Loudoun County? Text us and we will send information about it immediately to your phone or email!

Ashburn: Text ASHBURNHOMES to 33444
Leesburg: Text LEESBURGHOMES to 33444
Loudoun: Text LOUDOUNHOMES to 33444
Purcellville: Text PURCELLVILLEHOMES to 33444
Round Hill: Text ROUNDHILLHOMES to 33444