Quick overview

Refinancing—or getting a new mortgage after a short sale or foreclosure—requires you to wait a set period before most lenders will approve a new loan. The length of that waiting period depends on the mortgage program and investor rules, and it’s often shortened only with well-documented extenuating circumstances. Below I explain common timelines, what counts as extenuating circumstances, how lenders measure the waiting period, and practical steps to rebuild credit and position yourself for approval.

Common waiting periods by loan program

Below are industry-standard waiting periods as of 2025. These are program-level rules; individual lenders can add stricter “overlays.”

  • FHA: Generally 3 years after a foreclosure or completed short sale. In documented cases of extenuating circumstances (job loss, major illness) the waiting period may be reduced to 1 year for short sales or a shorter period for some new FHA programs. See HUD (FHA) guidance for specifics (HUD 4000.1) (https://www.hud.gov).

  • VA: Typical guidance expects re-established credit and lender review; many lenders look for about 2 years after foreclosure, though VA rules focus on the veteran’s overall credit reestablishment and residual income. Lender overlays vary; contact a VA lender for a loan-specific timeline (https://www.va.gov/housing-assistance).

  • USDA (Rural Development): Commonly 3 years after a foreclosure, with possible exceptions based on re-established credit and extenuating circumstances. Check USDA Rural Development policies for the most current program requirements (https://www.rd.usda.gov).

  • Conventional (Fannie Mae / Freddie Mac): Standard waiting period after a completed foreclosure is generally 7 years for Fannie Mae and Freddie Mac purchases. Short sales and deed-in-lieu events often have shorter baseline waits (commonly 4 years) and may be reduced to 2–3 years with documented extenuating circumstances and acceptable credit reestablishment. See the Fannie Mae Selling Guide and Freddie Mac Seller/Servicer Guide for exact matrices (https://www.fanniemae.com; https://www.freddiemac.com).

Note: These program rules change and individual lender overlays can be stricter. Always confirm the current matrix with your lender and refer to the program handbook.

How lenders measure the waiting period

Lenders count the waiting period from the date the foreclosure, short sale, or deed-in-lieu is recorded or completed. Important nuances:

  • Recorded date vs. sale date: Many guidelines use the legal “completion date” or date of public recording. Confirm how your lender calculates dates.
  • Short sale vs foreclosure: A short sale or deed-in-lieu usually carries a shorter wait than a completed foreclosure. For example, many conventional guidelines treat short sales as 4 years (standard) vs. 7 years for foreclosure.
  • Extenuating circumstances: To qualify for a reduced waiting period you must document the event (job loss, catastrophic injury, serious illness, death in immediate family, military deployment) and show it was truly beyond your control. Lenders and guarantors require written evidence and often proof that you have re-established good credit since the event.

Authoritative source examples: HUD’s FHA Handbook (HUD 4000.1) describes FHA treatment for foreclosure/short sale timelines; Fannie Mae and Freddie Mac publish waiting-period matrices in their guides (see links above).

What counts as extenuating circumstances?

Extenuating circumstances are events outside the borrower’s control that directly caused the default. Common examples that lenders and investors accept when well-documented:

  • Job loss or reduction in work hours with supporting separation notices and unemployment claims
  • Serious illness or disability (medical records) or catastrophic injury
  • Death of a wage earner (death certificate, probate papers)
  • Military deployment or extended service orders

Documenting the timeline, why the event caused the default, and how your situation changed afterward (new job, stable income) is critical. Lenders want to see that the borrower has re-established on-time payments and overall financial stability since the event.

Steps to requalify faster (practical plan)

  1. Know your timeline: Get copies of your public records to confirm the official completion/recording date of any short sale or foreclosure.
  2. Order full credit reports: Identify and dispute any reporting errors. Rebuilding begins with accurate information (AnnualCreditReport.com).
  3. Re-establish on-time housing payments: Rent or a mortgage paid on time for 12–24 months is powerful evidence.
  4. Improve your credit score: Pay down revolving debt, avoid new derogatory marks, and keep credit card utilization low.
  5. Build cash reserves and document income: Lenders look for stable employment history and savings.
  6. Gather documentation for extenuating circumstances: Keep termination letters, medical records, insurance claims, or deployment orders.
  7. Shop lenders: Some lenders are more flexible or have specific programs for borrowers after distressed sales. Ask about overlays and whether they follow the investor minimums.
  8. Consider alternative products: In some situations, FHA or subprime lenders can be positioned earlier than conforming financing. Weigh the cost and terms carefully.

Lender overlays and investor differences

Even where Fannie, Freddie, FHA, VA, or USDA set minimums, individual mortgage lenders can add overlays—stricter rules that extend waiting periods or raise qualifying standards. For example, a bank may require 7 years for conventional loans even if an investor allows 4 under extenuating circumstances. Always confirm both the investor rule and the lender overlay before assuming you meet the timing requirement.

Real-world examples (illustrative)

  • Client A (foreclosure 2018): With a conventional target loan, Investor rules required a 7-year wait. Client A focused on credit and savings; by year 7 she qualified and refinanced to a lower-rate conventional mortgage.
  • Client B (short sale 2020): FHA-eligible, showed documented job loss during the pandemic and steady income afterward; lender approved an FHA loan after 1 year under extenuating-circumstance processing (example consistent with FHA flexibilities when documented).

Common mistakes to avoid

  • Assuming all lenders follow the same timeline—many have stricter overlays.
  • Not documenting extenuating circumstances thoroughly.
  • Taking on new debt or missing payments while trying to rebuild credit.
  • Forgetting to check public records for the official completion date.

How refinancing differs from purchasing

The waiting periods above typically apply to purchasing a new home or getting a purchase mortgage. Refinancing an existing property you still own (i.e., after a short sale or foreclosure you do not own the property) is not applicable—refinancing requires ownership. If you retained ownership through a deed-in-lieu or other workout, discuss timing with your lender because the starting date may differ.

Helpful internal resources

What lenders will actually look at on application

  • Date of event (recording date of foreclosure or short sale)
  • Credit score and recent payment history (rent or installment payments)
  • Debt-to-income ratio and residual income (VA specifics)
  • Cash reserves and down payment source
  • Documentation supporting any extenuating circumstances

Final practical tips

  • Start rebuilding immediately: on-time payments and documented stability matter more than a single number on a credit report.
  • Shop multiple lenders and ask explicitly about overlays and the investor’s waiting period matrix.
  • Keep all documentation that supports a hardship claim; well-prepared files shorten underwriting delays.

Sources and further reading

Professional disclaimer: This article provides general informational guidance and does not constitute personalized legal, tax, or mortgage advice. Program rules and investor guidelines change; consult a licensed mortgage professional and the program handbooks for decisions that apply to your specific situation. In my practice I’ve guided dozens of borrowers through these timelines—documenting hardship and demonstrating ongoing credit performance are the most reliable ways to shorten the path to approval.