FHA program requires waiting 3 years before you can qualify for new mortgage financing. But my take on this guideline based on my 23 years experience as a mortgage professional is that many Lenders will be reluctant to lend to someone with a foreclosure as recent as 3 years, regardless of the FHA guidelines.
I'd recommend you take the time to put your financial house in order.
1. Save up a large down payment, at least 20% of the purchase price
2. Pay your rent on time every month and pay by check or ACH online transfers to your Landlord. Have that proof of payment for 24 months handy when you buy your home.
3. Be sure your credit is perfect. Pay your bills on time and keep your credit balances low relative to the limit. Use your credit conservatively.
4. Live within your means. Keep to your budget and take on the important financial responsibilties at hand before you consider undertaking another mortgage and home.
â€¢ FHA & USDA require 3 years from the foreclosure sale date/when the home is no longer legally in your name (only 1 year if it was due to extenuating circumstances, such as medical or death of a wage earner, etc.)
â€¢ VA requires 2 years from the foreclosure sale date/when the home is no longer legally in your name (only 1 year for extenuating circumstances)
â€¢ Fannie Mae & Freddie Mac require 7 years from the foreclosure sale date/when the home is no longer legally in your name (4 years if it was due to extenuating circumstances)
In all situations you need at least 12 months of re-established credit and 3 traditional trade lines, some lenders want 3 trade lines of 12 months each. Trade lines that survived a BK or foreclosure, such as a credit card you kept open, a car loan you maintained payments on/didn't include, student loans that you are making payments on that couldn't be included, etc. can count towards the re-established credit.
Other than medical collections that can be properly explained, if there are any late payments or delinquent accounts (collections, charge-offs, judgments, tax liens) after the foreclosure then the time seasoning often starts over again from the latest late payment/delinquent mark (underwriter's discretion).
Having a verifiable on time housing payment history goes a long way to making an underwriter feel comfortable, as well as taking a pre-purchase housing counseling class with a budgeting/financial module. Practically anything you can do to prove that you have made & kept a vow to make all payments on time will be helpful.
Shane Milne | Loan Officer in Orange County, CA | NMLS #81195
Direct local #'s: 949-273-4161 or 646-257-4842
Lending in all 50 states, all types of mortgages
After all your hard work in obtaining a mortgage I'd love to sell you the home. Please contact me so we can schedule a meeting and put some "timeline action items together". I work in Palm Desert so I would be more than happy to be your Realtor! Have a good weekend.
Lowell Fulson III
Short Sale Specialist
Titanium Inc, HRC Certified
Intero Real Estate Services
Lic # 01881415
"We begin and end each day with one goal: to provide the worlds finest customer service in real estate."
The time you have to wait to get a loan after a foreclosure depends on what type of loan you are applying for. Here's a quick, easy guide for foreclosure waiting periods, depending if you had a Chapter 7 or Chapter 13 foreclosure:
Please feel free to contact me if you have any further questions, I'd be glad to help.
All the best,
Roswell Moore, CMPS
Certified Mortgage Planner
We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund, in-house, FHA (w/a 580 score), 203k, VA, USDA, Jumbo, Conventional, loans to Canadians, Australians & other Foreign Nationals, on time. NMLS ID 263779
There are different re-purchase waiting periods based on how the owner exited the distressed property. The following cases are covered in the "Fannie Mae Single Family Selling Guide" on pages 441-447 of this link: https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sel072611.pdf
Bankruptcy (Chapter 7 or Chapter 11)
Bankruptcy (Chapter 13)
Multiple Bankruptcy Filings
Deed-in-Lieu of Foreclosure and Preforeclosure Sale (Short Sale)
Specifically, for your case foreclosures are covered on page 443, as follows:
"A SEVEN-YEAR waiting period is required, and is measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower.
Exceptions for Extenuating Circumstances
A THREE-YEAR waiting period is permitted if extenuating circumstances can be documented, and is measured from the completion date of the foreclosure action. Additional requirements apply between three and seven years, which include:
â€¢ Maximum LTV, CLTV, or HCLTV ratios of the lesser of 90% or the maximum LTV, CLTV, or HCLTV ratios for the transaction per the Eligibility Matrix.
â€¢ The purchase of a principal residence is permitted."
Page 466 lists what qualifies as â€œExtenuating Circumstancesâ€.
So the answer to your question is 7 or 3 years, depending if â€œExtenuating Circumstancesâ€ were involved.
Could be three. It depends on the reason for the foreclosure and what you can document as the cause of the foreclosure.