I get this question all the time, and there’s a lot of misinformation floating around out there, so I decided to get you some clarification.  This is as of 8/1/08 guidelines.

Please note, this is Fannie Mae’s Guidelines, so FHA, VA, and other types of loans will differ.

Chapter 7 Bankruptcy (liquidation):  4 years from the discharge or dismissal date

Chapter 13 (repayment plan):  2 years from discharge (paid as agreed) or 4 years from dismissal (kicked out)

Extenuating Circumstances: reduced to 2 years.

Multiple Bankruptcies:  5 years (exceptions may reduce it to 3 years)

Foreclosure:  must wait 5 years from the date of completion, and then from years 5-7, must put minimum 10% down and must have a credit score of 680 or more.  Primary residence only.  (extenuating circumstances can reduce it to 3%)

Deed-in-lieu-of-foreclosure: must wait 4 years from the date you deed property back to lender.  Then from year 4-7 may require a larger downpayment. (extenuating circumstances: reduced to 2 years, but still may need larger downpayment from year 2-7)

Short Sale / pre-foreclosure sale:  2 years with no additional requirements or guidelines. (no extenuating circumstances)

As you can see from the guidelines, a short sale is better than a deed in lieu, and a deed in lieu is better than a full-blown foreclosure.

Hopefully this will help folks out who are facing tough decisions.

Here’s a link to see the actual FNMA guidelines that were released.

AndyTolbert