Mortgage Financing with Foreclosures, Short Sales, and Bankruptcies

In the wake of the financial crisis and recent recession, millions of would-be homebuyers with foreclosures, short sales, or bankruptcies listed in their credit histories naturally wonder as to their prospects for new mortgage financing. Since lending requirements vary from product to product (such as conventional to FHA) and because investor guidelines are in constant flux, there is no easy answer as to which options a given borrower may have. Another complicating factor is "lender overlays." These are additional requirements that lenders routinely impose on the loans they underwrite in an effort to manage portfolio risk. Examples range from higher credit scores, limitations to loan sizes, increased assets, etc., and these will be adjusted periodically and vary from lender to lender.

With so many moving parts, it's hard to know what your options might be any given time. But beginning from a somewhat conservative base provides a general sense of viability. Here are some fairly standard requirements for popular loan programs: