Can You Get a Mortgage After Foreclosure?
No homeowner wants to face foreclosure, but unforeseen problems can arise at any time. If you have lost your house, don’t despair. If you wait a period of time and rebuild your credit, you can once again own your own home.
How Long Do You Have to Wait to Get a Government Mortgage?
You might be able to get a mortgage through the Federal Housing Administration (FHA) three years after the foreclosure is finalized. If you want to get a loan from Fannie Mae or Freddie Mac, you will need to wait seven years, unless you fell behind on your mortgage payments due to extenuating circumstances, you meet maximum loan-to-value guidelines, or you use the new mortgage to purchase a residence or to refinance and get limited cash out.
If you want to buy a house in a designated rural area, you might be able to obtain a mortgage through the United States Department of Agriculture (USDA). You will need to wait three years after the foreclosure and meet income and credit requirements.
With a Veterans Administration (VA) loan, the waiting period is typically two years. If your first mortgage was through the VA, you will need to repay the amount the VA lost when your first home went through foreclosure before you can obtain a new VA mortgage.
How to Get a Mortgage Through a Conventional Lender
If you want to get a conventional mortgage, the amount of time you will need to wait after foreclosure will depend on the individual lender’s policies. A lender with a normally long waiting period might shorten it if you make a substantial down payment.
Lenders have different minimum FICO scores required to obtain a mortgage. If your score is low, you might be able to find a lender willing to approve a mortgage, but you will likely have to make a large down payment or have a high interest rate. Some lenders specialize in helping customers who have foreclosures, bankruptcies or low credit scores in their financial history. You might be able to increase your chance of getting a mortgage if you have a co-signer.
Rebuild Your Credit
Losing a house in foreclosure can cause your FICO score to take a major hit. While you’re waiting to become eligible to apply for another mortgage, take steps to improve your credit score. Pay your bills on time each month, pay down your credit card balances and keep them as low as possible. Before you apply for a mortgage, check your credit reports and have any errors corrected.
Stay Focused to Move Forward
Losing your home to foreclosure can be heartbreaking, but you can recover financially. Take some time to pay down your debts and raise your credit score so that you’ll be able to quality for a new mortgage when you’re eligible. Talk to a financial or real estate counselor for tips on how to get back on track.
This article is intended for informational purposes only and should not be construed as professional or legal advice.