A specialized Non-QM program for borrowers with recent bankruptcy, foreclosure, short sale, or deed-in-lieu in their credit history. Conventional loans require 2–7 years of seasoning post-event; Non-QM accepts as little as 1 day out of bankruptcy (with overlays). The path back to homeownership for borrowers rebuilding their financial lives.
A Recent Credit Event loan (also called "non-prime" or "credit-event" loan) is a Non-QM program for borrowers with recent bankruptcy (Chapter 7 or 13), foreclosure, short sale, or deed-in-lieu in their credit history. The product fills a critical gap: conventional and FHA loans impose long seasoning periods (2–7 years) before a borrower can qualify after these events. Non-QM accepts borrowers as soon as 1 day out of bankruptcy at some lenders, with pricing overlays scaling by seasoning.
The product exists because credit events don't reflect lifetime creditworthiness. Many borrowers experienced bankruptcy or foreclosure during specific life crises (medical emergency, divorce, business failure, 2020 pandemic disruption, 2008 financial crisis) and have since rebuilt their financial lives. Their current income, credit behavior, and reserves are strong — but conventional gatekeeping still bars them.
Texas is one of the more active Recent Credit Event markets due to the 2008 housing crisis aftermath, oil-and-gas industry cycles affecting Houston/Permian Basin borrowers, and pandemic-era business closures. Specialized lenders (Angel Oak, Newfi, Acra, Carrington) actively underwrite these files and have refined seasoning matrices. Pricing carries 1.0–2.0% premium over conventional but provides homeownership 5–6 years earlier than conventional waiting periods.
Conventional loans require 4 years post-Ch 7 bankruptcy, 7 years post-foreclosure. For borrowers who experienced a credit event during a specific crisis (medical, divorce, business failure, 2008/2020 disruptions) and have since rebuilt, the long wait is punitive. Non-QM credit-event loans give these borrowers homeownership 3–6 years earlier — accepting a rate premium of 1.0–2.0% as the trade-off. Most credit-event borrowers refinance to conventional once full seasoning is achieved (4 yr post-Ch 7, 7 yr post-foreclosure).
| Seasoning Since Event | Min Credit | Max LTV — Purchase | Reserves | Rate Premium vs Conv |
|---|---|---|---|---|
| 4+ yr (full conv seasoning) | 620 | 80% | 3 mo | +1.0% |
| 2–4 yr | 640 | 80% | 6 mo | +1.25% |
| 12–24 mo | 660 | 75% | 6 mo | +1.5% |
| 6–12 mo | 680 | 70% | 9 mo | +1.75% |
| 1 day–6 mo | 700 | 65% | 12 mo | +2.0%+ |
| Event | Conventional Seasoning | FHA Seasoning | Non-QM Minimum |
|---|---|---|---|
| Chapter 7 Bankruptcy | 4 years from discharge | 2 years from discharge | 1 day after discharge |
| Chapter 13 Bankruptcy | 2 years from discharge or 4 years from filing | 1 year of on-time plan payments | 1 day after discharge (some) |
| Foreclosure | 7 years | 3 years | 1 day–24 mo (varies) |
| Short Sale | 4 years | 3 years | 1 day–24 mo (varies) |
| Deed-in-Lieu | 4 years | 3 years | 1 day–24 mo (varies) |
| Multiple Events | Re-set clock at most recent | Re-set clock | Per most recent + overlay |
*Non-QM accepts borrowers years before conventional / FHA. The trade-off: rate premium of 1.0–2.0%. Many borrowers use Non-QM bridge financing to homeownership, then refinance to conventional once full seasoning is achieved.
April 2026 illustrative rates. Contact Ethan for current pricing.
18 mo post-Ch 7 · Medical debt cause · Strong recovery
2008 crisis foreclosure · 14 years ago · Wants new property
Ch 7 Sep 2023 · Restaurant closed · Now employed
Ch 7 discharged 8 months ago · Aggressive lender needed
3 yr post-short-sale · Divorce-driven · Strong recovery
4+ years post-Ch 7 · Conv eligible · Conv is cheaper
*Conv seasoning: Ch 7 BK 48 mo, Ch 13 BK 24 mo from discharge, Foreclosure 84 mo, Short Sale 48 mo. If conventional is available at your seasoning, it's almost always cheaper.
NEXA accesses 200+ wholesale lenders. Below are the top Non-QM partners for this program.
Angel Oak and Carrington are the most aggressive on short-seasoning files (1 day–12 mo post-event). Newfi and Acra handle the 12–36 mo seasoning range. Beyond 36 months, more lenders compete and pricing improves. NEXA tracks each lender's current seasoning matrix — these update frequently as portfolios shift.
| Factor | Non-QM Credit Event Now | Wait for Conventional |
|---|---|---|
| Available When | As soon as 1 day post-event | 4–7 years post-event |
| Typical Rate | 8.5–9.5% | 6.5–7.0% |
| Down Payment | 20–35% | 3–5% |
| Reserves | 6–12 mo | 0–2 mo |
| Closing Time | 35–45 days | 30–45 days |
| Rate-Term Refi to Conv Later | Yes, once seasoning met | — |
| Best For | Need home now, can refi later | Can wait, want lowest cost |
| Lifetime Cost Comparison | Higher unless refi works | Lowest |
The decision framework is binary: can you wait the full conventional seasoning (4 yr Ch 7, 7 yr foreclosure)? If yes, do — conventional is dramatically cheaper. If you genuinely need homeownership now and accept the rate premium, Non-QM bridges you until you can refinance.
A borrower 3.5 years post-Ch 7 sometimes pursues Non-QM rather than waiting 6 more months for conventional. The 6-month wait would save 1.5–2.0% in rate for 30 years — easily $100K+ on a $300K loan. Solution: Always check conventional seasoning math. If you're within 12 months of conv-eligible, almost always wait.
Borrower takes Non-QM credit event loan 18 months post-Ch 7. At year 4 post-Ch 7, they're now conv-eligible — but stay on Non-QM out of inertia. The 2% rate difference for 26 remaining years = $130K+ overpaid. Solution: Set calendar reminders for conv seasoning dates. Refinance immediately when eligible.
Recent credit event loans typically require 20–35% down (vs 3% conv). Borrower budgets for 3% down, can't close. Solution: Plan for 20% minimum down at very short seasoning, 25–35% for the shortest seasoning tiers.
Lender requires 6–12 mo PITIA reserves AFTER closing. Borrower drains accounts for down payment + closing, has no remaining reserves. File declined. Solution: Plan for total liquidity = down payment + closing costs + 6–12 mo PITIA. Don't deplete reserves to close.
Generic "had financial difficulties" explanation hurts the file. Underwriter needs specifics. Solution: Write detailed letter explaining (a) what caused the event, (b) what you've done since to rebuild, (c) why it won't recur. Attach supporting docs (medical bills, divorce decree, job loss notice). Strong letters can move the file to better pricing tier.
Borrower discharged Ch 7 12 months ago but has 2 late payments in past 6 months on rebuilt credit cards. File declined or pushed to subprime tier. Solution: Ensure 12+ months of perfect payment history on all post-event credit before applying. Any post-event late payment is a major red flag.
Credit event cash-out on Texas homestead still triggers 50(a)(6): 80% LTV cap, 12-day notice, 2% closing-cost cap, in-person closing, spousal joinder. Solution: Use Texas-experienced wholesale partner. Add 12 days to timeline.
Borrower has both a Ch 7 BK (2 years ago) and a foreclosure (4 years ago). Most lenders use the MOST RECENT event for seasoning, not the oldest. Solution: Be transparent with the lender about all events. Pricing tier is based on most recent.
Ethan helps borrowers recovering from past credit events get back into homeownership. Send your specific timeline (when BK/foreclosure occurred) and current credit — he'll route to the lender most favorable for your seasoning level.
