Extenuating circumstances is a hard sell most of the time. It can be done, but you would need to show catastrophic loss of income or an insurmountable amount of bills that forced the issue. Generally speaking we're talking someone got diagnosed with a serious illness and racked up hundreds of thousands of dollars in medical bills. The other situation would be the main breadwinner loses their job for multiple years in a row forcing a catastrophic set of circumstances.
You could theoretically get a conventional loan through FHLMC as they do not have waiting requirements you just have to get an "accept" through their automated underwriting system but the credit risk algorithm is pretty in line with FNMA's who has the 4 year waiting requirement. You could try, but it's unlikely to be approved until you hit that four year mark.
There are obviously non-qm alternatives that will allow you to get a mortgage with the BK but the rate reflects the risk. We're talking 5.5%+ at minimum to start for borrowers with excellent credit scores and low LTV loans.
Our score is ok at 715. Two cc and a car note. Both low balances. But it would be 5.5% vs an FHA at 3% and FHA I can do after 2 years.
I'm going through the same thing as you as we speak. My Chapter 7 just turned 2 years and I found a $425K townhouse that I want to buy.
My 5/4/2 FICO scores are:
Here are my pre-approved options:
1) FHA loan
15-year fixed at 2.375%
47% down ($200K)
2) Non-QM loan
30-year fixed at 5.75%
20% down ($85K)
3) Portfolio loan (conventional)
15-year fixed at 3.0%
30-year fixed at 3.85%
57% down ($243K)
Guess which one I'll be going with?
With the FHA you have PMI for 11 years or until you re-fi and with Convent one, no pmi. With rates said to increase next year making a refi more %, i'd assume #3? If not walk me through your thoughts.