Can You Get a Non-QM Loan After Bankruptcy, Foreclosure, or Short Sale?
A major credit event — bankruptcy, foreclosure, short sale, or deed-in-lieu — doesn’t have to mean years on the sidelines. Non-QM programs are specifically designed to serve borrowers who’ve had a setback and are ready to move forward. What matters is not that the event happened, but when it happened and what your credit has looked like since.
The Concept of Seasoning
Seasoning refers to how long ago a major derogatory event occurred, measured from the date of discharge, sheriff sale, transfer of title, or similar completion date. The longer the seasoning, the stronger the program tier you can access — and the better the LTV and terms available to you.
Credit Tiers and Seasoning Requirements
| Program Tier | Bankruptcy / FC / SS / DIL Seasoning | Housing Payment History | Max DTI |
|---|---|---|---|
| A+ (strongest) | 48+ months | 0×30 in last 12 months | 50–55% |
| A (mid tier) | 36+ months | 1×30 in last 12 months | 50% |
| A− (most flexible) | 24+ months | 2×30 in last 12 months | 45% |
What Counts as a Major Derogatory Event?
- Chapter 7 or Chapter 13 Bankruptcy (discharge date)
- Foreclosure (sheriff sale or transfer of title)
- Short Sale
- Deed-in-Lieu of Foreclosure
- Loan Modification due to default or hardship
Collections and Charge-Offs
Collections and charge-offs in the last three years exceeding $5,000 must generally be paid off prior to or at closing ($15,000 aggregate threshold for medical collections). Past-due accounts must also be brought current before closing. If you have collections below these thresholds, they may not need to be resolved — but this is evaluated on a case-by-case basis.
Your Path Back to Homeownership
Many borrowers use Non-QM as a bridge: purchase now at a slightly higher rate, build equity, continue rebuilding credit, then refinance into a conventional loan in 2–3 years when they meet standard guidelines. This strategy lets you get back into homeownership on your timeline rather than waiting for an arbitrary window to close.
Key Takeaways
- You can qualify for a Non-QM loan as soon as 24 months after a major credit event
- The seasoning clock typically starts at discharge, transfer of title, or completion of the event
- Housing payment history since the event is critical — 0 or 1 late payments in 12 months is ideal
- Collections over $5K (non-medical) generally must be paid off at or before closing
- A Letter of Explanation for derogatory items is standard — be prepared to document the circumstances
Serving borrowers throughout California — Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County, and the greater Southern California region including Santa Ana, Irvine, Anaheim, Huntington Beach, Fullerton, Garden Grove, and surrounding communities.