The fact that you have a foreclosure in your credit history doesn't necessarily mean you can't buy a home, but you will need to wait a while after the foreclosure before you'll be able to qualify. Most mortgage lenders these days underwrite loans to either FHA or Fannie Mae lending guidelines, and both types of financing require that you wait a certain amount of time before you can qualify.
Fannie Mae Foreclosure Waiting Period
Fannie Mae requires a standard waiting period of seven years after a foreclosure. In other words, once the foreclosure is complete, you'll need to wait at least seven years before you can get a Fannie Mae conventional loan.
It is possible to get the waiting period reduced, but it's not easy to do. The Fannie Mae guidelines do allow for a reduction of the waiting period if you can document that circumstances well beyond your control led directly to the foreclosure. This isn't always easy to pull off because different underwriters may have a very different opinion about what "extenuating circumstances" means.
Banks these days fear the dreaded loan "buy back", so they often won't mess with loans that fall into gray areas in the guidelines. The last thing they want is to have to buy back the loan from their investor over a difference in opinion of what constitutes "extenuating circumstances".
However, if circumstances well beyond your control did indeed lead to the foreclosure, it might be worth a shot to see if you can get approved. It won't be easy, but if you're really wanting to buy a house, it might be worth checking with a few banks to see if it's possible.
FHA Waiting Period for Foreclosures
FHA guidelines are less strict than Fannie Mae guidelines, so the foreclosure waiting period is just three years. FHA also allows for a reduction in the waiting period for extenuating circumstances, but again, many banks may choose just to stick with the standard three-year waiting period.
Conclusion
If you have a foreclosure in your credit history and you're within the waiting period for FHA and Fannie Mae loans, it's a good idea to start working on reestablishing your credit right away. Always pay everything on time, clear up any negative credit items, and pay down and eliminate debt. Once the waiting period is up, your credit will be in the best shape it can be, which will make it that much easier to get a great loan.
Note that what is presented here is just a very general overview. Lending guidelines can change at any time and other guidelines may apply to your particular situation.
Fannie Mae Foreclosure Waiting Period
Fannie Mae requires a standard waiting period of seven years after a foreclosure. In other words, once the foreclosure is complete, you'll need to wait at least seven years before you can get a Fannie Mae conventional loan.
It is possible to get the waiting period reduced, but it's not easy to do. The Fannie Mae guidelines do allow for a reduction of the waiting period if you can document that circumstances well beyond your control led directly to the foreclosure. This isn't always easy to pull off because different underwriters may have a very different opinion about what "extenuating circumstances" means.
Banks these days fear the dreaded loan "buy back", so they often won't mess with loans that fall into gray areas in the guidelines. The last thing they want is to have to buy back the loan from their investor over a difference in opinion of what constitutes "extenuating circumstances".
However, if circumstances well beyond your control did indeed lead to the foreclosure, it might be worth a shot to see if you can get approved. It won't be easy, but if you're really wanting to buy a house, it might be worth checking with a few banks to see if it's possible.
FHA Waiting Period for Foreclosures
FHA guidelines are less strict than Fannie Mae guidelines, so the foreclosure waiting period is just three years. FHA also allows for a reduction in the waiting period for extenuating circumstances, but again, many banks may choose just to stick with the standard three-year waiting period.
Conclusion
If you have a foreclosure in your credit history and you're within the waiting period for FHA and Fannie Mae loans, it's a good idea to start working on reestablishing your credit right away. Always pay everything on time, clear up any negative credit items, and pay down and eliminate debt. Once the waiting period is up, your credit will be in the best shape it can be, which will make it that much easier to get a great loan.
Note that what is presented here is just a very general overview. Lending guidelines can change at any time and other guidelines may apply to your particular situation.
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