How Soon Can I Buy A Home After A Foreclosure?
It’s almost ten years since the housing bubble burst, which resulted in millions of homeowners across the country declaring bankruptcy, or being forced into foreclosure or a short sale. According to the Wall Street Journal, over the next five years, about 6 million Americans will have their bankruptcies disappear from their credit reports, enabling more homebuyers to enter the housing market.
The question many former homeowners have, who’ve been able to financially recover and can save for a down payment, is “When will I be able to buy another home?”
While your credit takes a big hit after foreclosure, the amount of time you must wait before applying for a new home loan depends on the type of home loan and your financial circumstances.
Eligibility for an FHA Home Loan after Foreclosure
You must wait at least 3 years after the foreclosure case has ended, usually from the date that you transferred ownership of the property to the foreclosing entity/designee. If the foreclosure also involved an FHA loan, the 3-year waiting period starts from the date that FHA paid the prior lender on its claim.
Exceptions: You may be able to qualify sooner than three years if you can show extenuating circumstances. That means demonstrating to the lender that the foreclosure was caused by a one-time event that was beyond your control, such as a serious illness or death of a wage earner, and you have re-established good credit since the foreclosure.
Eligibility for a Fannie Mae/Freddie Mac Loan after Foreclosure
To qualify for a Fannie Mae or Freddie Mac loan, you must wait at least 7 years after the foreclosure.
Exceptions: You may be able to shorten the waiting period to 3 years for a Fannie Mae home loan if you can meet all of these requirements:
Eligibility for a VA Home Loan after Foreclosure
VA lenders can approve financing for a home loan 2 years after a foreclosure completion date.
Your FICO Score and Getting a New Home Loan
Notwithstanding the waiting periods, you must still establish good credit following the foreclosure, bankruptcy or short sale. That means your FICO score must meet the lender's minimal requirements to qualify for a home loan.
Learn the factors that can impact your credit score >
If you think you’re in good financial shape to apply for a home loan, contact a Certainty mortgage professional to discuss your options.
The question many former homeowners have, who’ve been able to financially recover and can save for a down payment, is “When will I be able to buy another home?”
While your credit takes a big hit after foreclosure, the amount of time you must wait before applying for a new home loan depends on the type of home loan and your financial circumstances.
Eligibility for an FHA Home Loan after Foreclosure
You must wait at least 3 years after the foreclosure case has ended, usually from the date that you transferred ownership of the property to the foreclosing entity/designee. If the foreclosure also involved an FHA loan, the 3-year waiting period starts from the date that FHA paid the prior lender on its claim.
Exceptions: You may be able to qualify sooner than three years if you can show extenuating circumstances. That means demonstrating to the lender that the foreclosure was caused by a one-time event that was beyond your control, such as a serious illness or death of a wage earner, and you have re-established good credit since the foreclosure.
Eligibility for a Fannie Mae/Freddie Mac Loan after Foreclosure
To qualify for a Fannie Mae or Freddie Mac loan, you must wait at least 7 years after the foreclosure.
Exceptions: You may be able to shorten the waiting period to 3 years for a Fannie Mae home loan if you can meet all of these requirements:
- Provide documentation that the foreclosure was the result of extenuating circumstances.
- The loan-to-value (LTV) ratio of the new mortgage is the lesser of 90% or the maximum LTV/CLTV/HCLTV ratios listed in Fannie Mae’s eligibility matrix (www. fanniemae.com/content/eligilitity_information/eligibility-matrix.pdf).
- Use the new mortgage loan for either the purchase of your primary residence, or a limited cash-out refinance. You cannot use the loan to purchase a second home or investment property.
Eligibility for a VA Home Loan after Foreclosure
VA lenders can approve financing for a home loan 2 years after a foreclosure completion date.
Your FICO Score and Getting a New Home Loan
Notwithstanding the waiting periods, you must still establish good credit following the foreclosure, bankruptcy or short sale. That means your FICO score must meet the lender's minimal requirements to qualify for a home loan.
Learn the factors that can impact your credit score >
If you think you’re in good financial shape to apply for a home loan, contact a Certainty mortgage professional to discuss your options.