Recent Negative Credit Occurrences

A recent negative credit occurrence, such as a Foreclosure, Bankruptcy, Short Sale, or Deed-In-Lieu doesn’t mean that you can't buy a house. Often the waiting period after a negative credit occurrence can be a period as short as 1 day after a Foreclosure, Bankruptcy Discharge, Short Sale, or Deed-In-Lieu date. While Non-Qualified and Non-Agency loan programs are constantly evolving please reference the below guidelines to assist you in determining if a Non-Prime Loan program is right for you:

Credit scores as low as 500 (including jumbo loans)
Up to 90% Loan-To-Value with no Mortgage Insurance
1 day out of Foreclosure, Short Sale, Bankruptcy, or Deed-In-Lieu
Loans up to $1 million (minimum loan $75,000)
Cash out for reserves acceptable
Late Mortgage Payments are Acceptable
Debt-To-Income up to 50% considered
Limited or no tradelines Acceptable: Maximum 75% Loan-To-Value
Maximum cash-out to $500,000

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Recent Negative Credit Occurrence Closed Loan Scenario

Credit Scenario: Chapter 7 bankruptcy just outside of three years, but foreclosure within the most recent two years on an outstanding $341,000 mortgage amount
New Non-Prime Loan Request:
Purchase price: $227,500
Down payment: 20% down
Loan request: $182,000
Borrower's middle credit score: 680
Total debt-to-income ratio: 21%
Why the New Loan Made Sense:
Prior to the negative credit occurrences, the borrower owned a business and had a one-time medical emergency that caused him to stop working and lose his business. The co-borrower became the sole income source for the household.
After the loss of the house the primary borrower returned to school to get a degree that allowed him to start working for a company
The borrower had been renting and provided cancelled checks to demonstrate a perfect payment history
Using just the co-borrower’s income and assets the borrower’s met the Non-Prime Lending income and asset requirements
The borrower’s new mortgage payment will be slightly more than their documented rent payment

Agency Loan Program – Derogatory Credit Waiting Period (In Years)

Loan Type BK – Chapter 7 BK – Chapter 13 Discharge BK – Chapter 13 Dismissal Foreclosure Short Sale, Deed-In-Lieu, Pre-Foreclosure Modified Mortgage
Conventional 4 2 4 7 4 2 (Freddie 0)
Conventional – Extenuating Circumstance 2 2 5 3 (requires 10% down) 2 0
Jumbo 4 4 4 7 4 2
FHA 2 1 0 3 3 0
VA 2 2 1 2 1 0
USDA 3 1 0 3 3 0
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