“When can I get a loan after my foreclosure?” That’s a question I hear from many potential buyers. The answer is simple; it depends on what type of loan you’re trying to qualify for. You’re probably looking at a FHA Loan– 3 years, Conventional Loan– 7 years, VA Loan- 2 years. Lets break this down in detail and I’ll review the exceptions; who knows, you may qualify for one now.
FHA Qualification: 3 Years
To qualify for an FHA mortgage loan you will wait three years after the foreclosure has ended. This end date is normally the time in which your home was sold in the foreclosure proceeding.
There are exceptions to this three-year rule if you can show extenuating circumstances. This means you have to demonstrate the cause of your foreclosure was a one-time event that was beyond your control, such as:
- You lost your job
- Serious illness
- Death in the family
Conventional (or private lenders): 7 Years Average
Simply put, each lender has different requirements but if the loan you seek is backed by Fannie Mae or Freddie Mac then they require longer waiting periods of 7 years. Good news, there are a few lenders who will lend within two years post-foreclosure but they will likely seek a higher down payment – sometimes 25% – and require a higher interest rate.
Do you still want a conventional loan within three years for a Fannie or Freddie loan? Well you would need to meet the following requirements:
- Use the new loan for the purchase of a personal residence only
- Show the maximum loan-to-value ratio of your new mortgage is 90% OR the loan-to-value ratio listed in Fannie Mae’s matrix (click here).
- Prove the previous foreclosure was due to an extenuating circumstance.
VA Qualification: 2 Years
The Department of Veterans Affairs states if you or your spouse is a veteran or currently serving in the United States military then you may be able to achieve this type of loan in two years time.
Other Considerations – Credit Score
Lenders are looking for buyers with a credit score around 620 and above. It’s understandable if your credit was hit with a 100-point drop at the time of your foreclosure but good news is your credit score should have improved by now. If you need additional credit repair help then check out 2019 top 10 best credit repair companies here.
They should advise simple tips like the following:
- Pay your bills on time and be consistent about it
- The balances on your credit accounts should be 20% or lower.
- Watch your credit report for any errors
- Maintain no more than 3 credit cards and use them at least once a quarter
Ready to see if you can qualify for a mortgage? Contact me at 407-690-8101 and I can refer you to a few reputable mortgage lenders.
Written By: Rustin Davis