Credit After a Short Sale vs Foreclosure, and When You Can Buy Again

I am Mike Watson, DRE #01712313. I list houses and package short-sale files in Lancaster, Palmdale, and Quartz Hill. Career production is 1,210+ closed transactions and $317M+ in volume since 2002. The as-of date is on the proven track record page. It moves when the next sale closes. This page is about credit after a short sale or a foreclosure, and about the wait before another mortgage. I will not predict a score. Drops vary widely. They are sometimes discussed around 100 points or more. It depends. A free HUD-approved counselor is at 800-569-4287. I do not name a local office. I am not the counselor, and I am not the lender.

Waiting periods are investor rules. They are not a promise from me. A conventional short sale is often about four years, and sometimes about two years when extenuating circumstances are documented. A conventional foreclosure is often about seven years, and sometimes about three years with those circumstances documented. FHA is commonly about three years. FHA may allow a shorter short-sale path if the borrower was current for the 12 months prior. Confirm HUD Handbook 4000.1. VA is often about two years. Confirm the current VA materials. A deed in lieu is often grouped with a foreclosure or a short sale, depending on the investor. I will not guess the gentler box. Read short sale versus foreclosure if you are still choosing the exit. Read buying again when the question is the next house in this valley.

Extenuating circumstances are a documented case, not a label I can give you. I will not add waits, waivers, or loan types that are not in the table.

How much does a short sale or a foreclosure drop a credit score?

The drop varies widely, and it is sometimes discussed around 100 points or more, but it depends on the file you already have.

A short sale is often reported as settled for less than the full balance. A foreclosure is reported as a foreclosure. A deed in lieu may show as its own remark, or it may be coded in a way that looks like one of the other two. Bureaus and servicers do not use one script. Two people with the same sale price can see different point moves because the reports underneath were different. Late payments, a collection, or a high card balance may already have done damage before the sale recorded. I will not predict a score. I will not give you a recovery month. Pull your own report and read the mortgage line with a lender. If a remark is wrong, correct it with documents. Do not ask a bureau to delete an accurate foreclosure. That request wastes time, and it can make the next underwriter trust the file less.

The people who share a loan can share the mark. If both names were on the note, expect both reports to be in the conversation. A spouse who was not on the loan is a different question. Ask the lender. Do not assume a community-property rule I have not read against your deed. Do not add yourself to someone else's card to hide the mortgage event. Underwriters look for the housing event itself. A new credit line with a large balance can make the next file worse. Pay the housing you have now, on time, if you still have a rent or a remaining loan. I will not tell you to skip a payment to "start a clock." The date lenders often use is completion, not the first miss. New late payments are a separate problem.

How long after a short sale before a conventional loan?

A conventional loan often wants about four years after a short sale, and sometimes about two years when extenuating circumstances are documented.

Four years is the range I hear for a standard conventional file. Two years is the shorter range, and only with documentation. Extenuating circumstances mean a serious event you can prove. They do not mean a payment that felt tight, or a choice you would rather not explain in a letter. I will not label your situation. The lender and the underwriter do that from paper. Bring the short-sale approval and the closing disclosure so the completion date is not a guess. If you had more than one housing event, ask the lender how the guides stack. I will not invent a longer or shorter number for a second event. I also will not add a down-payment rule, a loan-to-value cap, or a special program that is not in the sentence above. Those details live in the selling guide on the day you apply. Freddie Mac and Fannie Mae can differ at the edges. Confirm both if your lender sells to both.

A conventional approval is not an FHA approval with a different logo. People mix the columns because both are "a mortgage." The table keeps them apart on purpose. If a loan officer quotes a wait that is kinder than this page, ask which guide and which date they used. Put it in writing before you write an offer in Palmdale or Lancaster. A verbal "you should be fine" is how escrows die in week two. If the quote is harsher than this page, the same instruction applies. Overlays exist. A lender can be stricter than the investor guide. I will not argue your file into a box the investor has not opened.

How long after a foreclosure before a conventional loan?

A conventional loan often wants about seven years after a foreclosure, and sometimes about three years when extenuating circumstances are documented.

Seven years is the long range. Three years is the shorter range, and it is not a courtesy. The underwriter wants documents, and the guide can add limits inside that shorter window. I am not listing those limits here, because a partial list becomes a fake exception. Confirm the selling guide when you apply. Bring the trustee deed. The auction day you remember and the recording date on the deed can differ. Ask which date the investor measures. If the foreclosure was on a house you did not live in, say so at the start. I will not quote a separate investment wait. The lender will. If a bankruptcy wrapped around the same loan, say that too. I will not blend the bankruptcy clock and the foreclosure clock into a new number of my own.

A foreclosure is usually the heavier conventional mark when people compare it with a completed short sale. That comparison only helps if you still have a choice. If the trustee sale already happened, the planning job is the seven-year range, the possible three-year path, and a clean record from here forward. If the sale has not happened, go back to the comparison and to whether you can still sell or keep the house. Do not skip a payment because a blog said the credit outcome was already decided. It is not decided until the papers are recorded. A short sale that never gets approval can still become a foreclosure. The wait you hoped for is not the wait you get.

What does FHA usually require after a short sale or foreclosure?

FHA commonly wants about three years, and it may allow a shorter short-sale path if the borrower was current for the 12 months prior.

Confirm that sentence in HUD Handbook 4000.1 on the day you apply. Handbook pages get revised. I will not paste a waiver I have not re-read against your payment history. The shorter path I will name is the one for a short sale when you were current for those 12 months. If you were late, do not assume it is open. I will not invent a matching shortcut for a foreclosure, a deed in lieu, or a bankruptcy. FHA also cares about the rest of the file: collections, the new housing payment, and the property you want to buy. None of that is a second waiting period I can quote. A lender who offers FHA should tell you whether the three-year range, or the shorter short-sale path, is the one in their findings.

FHA is not a prize for having had a hardship. It is a loan with mortgage insurance and with property rules. Roof, paint, wood rot, and safety items still stop purchases in this valley. Your old short sale does not relax the next appraisal. If the house you want is in an association, or it has a solar payment, the next underwriter still counts those costs. That stack is covered on the junior lien page, from the seller side. The buyer side is the same idea. The payment has to fit. I will not estimate it here.

What does VA usually require?

VA often wants about two years after a short sale or a foreclosure, and you still confirm the current VA materials.

Two years is the range I will say. I will not add a zero-wait rule for borrowers who stayed current. I will not add a different deed-in-lieu number. If a VA lender shows you a kinder path in the current circular or handbook, that paper controls, not this page. Bring your certificate of eligibility questions to that lender. I do not issue the certificate, and I do not know your remaining entitlement. Service, discharge, and the old loan type are their interview. Counseling at 800-569-4287 is free if you want a neutral list of questions first. Ask the counselor to help you list dates. Do not ask the counselor to approve the loan. They cannot.

Edwards and Plant 42 put a lot of VA buyers in Lancaster, Palmdale, and Quartz Hill. The wait is still the wait. The base does not waive it. When a lender says you are eligible, the house search is ordinary: commute, condition, and a payment you have seen in writing. I will not print a rate. I will not print a median. Closed sales move. Use the Lancaster sold page and the market recap that same week. The first-time buyer guide is for that eligible day. It is not a way around an open waiting period, even if a program calls you a first-time buyer under its own definition.

Is a deed in lieu treated like a short sale or a foreclosure?

A deed in lieu is often grouped with a foreclosure or with a short sale, depending on the investor, and I will not guess the gentler box.

The name on the deed is not the underwriting box. One investor may treat the deed like a short sale. Another may treat it like a foreclosure. A credit remark may not match the story you tell at the application. Ask the lender to classify the event from the report and from the agreement you signed. If the agreement is silent, do not fill the silence with the kinder year. Bring the recorded deed and any release. A release of the debt and a waiting period are different subjects. One can be cleaned up while the other is still running. Tax treatment is a third subject. It belongs with a CPA, on the tax page, not in a credit guess.

Owners sometimes choose a deed in lieu because it sounds quieter than a trustee sale. Quiet is not a credit category. If you have not signed yet, get the servicer's position in writing, and have a California housing attorney read the release. I package listings. I do not classify the next loan. If junior liens, an HOA, or a solar lease are why the servicer will not take the deed, that problem is on the lien page, not a reason to invent a shorter wait.

What should you do in the Antelope Valley while you wait?

Use the wait to date the event and keep a clean housing record. Do not shop a mortgage you cannot close.

You can look at houses in Lancaster, Palmdale, and Quartz Hill. Looking is not an offer. An offer that needs a loan inside an open wait falls apart, and the deposit can be at risk. Renting during the wait is a normal plan. Keep the lease and proof of on-time payment. Save the old closing package in one folder: approval, disclosure, deed, and the hardship letter if you may need it later. Pull your report once a year and fix real errors. Ignore any mail that offers to delete the foreclosure for an upfront fee. HUD counseling is free at 800-569-4287. I do not name a local office, because the office that answers can change.

When a lender puts eligibility in writing, then we look at a real tract. Quartz Hill often prices apart from east Lancaster and east Palmdale. I will not freeze that gap. The sold page and the recap are the live numbers. Call or text (661) 733-2196 when that letter exists. If you are not there yet, call the servicer and a counselor before you call me about a new purchase. If you still own the house, you are not in the rebuild yet. Finish the exit first. A score is not a plan. A dated approval from a lender is.

What is not in these ranges?

These ranges are not a pre-approval, not a credit-score forecast, and not a list of every overlay a lender might add.

I did not include a target score. I did not include a rate. I did not include a down payment. I did not include extra exceptions for divorce, medical bills, or a job loss, even though people ask. Those facts may matter inside the extenuating-circumstances test. They are not automatic shorter clocks. The lender decides. I did not include USDA, jumbo, or a portfolio loan, because each can write its own rule and I will not invent one. If your next house will not be the one you live in, say so. The overlay can change. If a co-signer is part of the plan, the lender has to underwrite that person too. None of this is fixed by the city you buy in. Lancaster does not have a private waiting period. Palmdale does not either.

The practical close is small. Know which event you had. Know the completion date. Ask a lender to name the guide. Keep paying what you owe now. Use a free counselor if the letters are confusing. Use me when the question is a house in this valley and a lender has said the wait is over, or when you still need to sell the one you have. The table is a range on purpose. Your file is the only clock that counts.