Can You Buy A House After Foreclosure?

buy a house after foreclosure

Buy A House After Foreclosure

Yes, it is possible to buy a house after foreclosure, but only after a certain amount of time has passed. Most lenders these days underwrite their loans to either Fannie Mae or FHA guidelines, and both have a required waiting period before you will be able to qualify for a  home loan when you are ready to buy a house after foreclosure.

What Is The Waiting Period for Fannie Mae Financing When You Buy A House After Foreclosure

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 and buy a house after foreclosure.

It is possible to get the waiting period reduced when you are ready to buy a house after foreclosure, 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 getting a home loan to buy a house after foreclosure 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” when you are ready to buy a house after foreclosure.

However, if circumstances well beyond your control did indeed lead to the foreclosure, it might be worth seeing if you can get your loan approved to buy a house after foreclosure. It will not be an easy process, but you may be able to make it work when you are ready to buy a house after foreclosure.

FHA Waiting Period To Buy A House After Foreclosure

FHA guidelines are less strict than Fannie Mae guidelines, so waiting period to buy a house after foreclosure 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 to buy a house after foreclosure.

Conclusion: Can You Buy A House After Foreclosure?

If you had a foreclosure in the past and you’re still in the waiting period to buy a house after foreclosure, it might not be a bad idea to take some steps to clean up and reestablish your credit before you buy a house after foreclosure. Be sure to pay all your bills on time, pay down debt, and clear up any derogatory items in your credit file. The idea is to get your credit situated so that when the waiting period is over, you’ll be in a great position to get a great mortgage deal when you are ready to buy a house after foreclosure.

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 when you are ready to buy a house after foreclosure.

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