One question I commonly hear in today’s turbulent real estate market has to do with how long you have to wait to buy a house after a foreclosure. Just to clear, there is no restriction on buying a home after a foreclosure, just on getting a home loan after a foreclosure. Even then, it may be possible (though unlikely, to be honest) to find mortgage financing right after foreclosure, just not from the most common sources of mortgage money such as FHA insured or Fannie Mae funded mortgage financing. Because FHA and Fannie Mae are so dominant in the mortgage markets today, it’s likely they will dictate how long you will need to wait.
The following is a general rundown of the foreclosure guidelines for Fannie Mae and FHA. Note that these guidelines are subject to change at any time and often have more detailed nuances than what is addressed here. For more specific information about your particular situation, it’s important that you consult with a qualified mortgage professional.
Fannie Mae Foreclosure Waiting Period
Fannie Mae’s waiting period for new Fannie Mae financing is 7 years. It is possible that this period can be reduced, but you will need to be able to document that the foreclosure was caused by extenuating circumstances that were beyond your control.
FHA Foreclosure Waiting Period
FHA is not as strict as Fannie Mae, but you will still need to wait at least three years before you are eligible for an FHA insured home loan. As with Fannie, it is possible this period can be reduced, but you will need to be able to document that the foreclosure was caused by extenuating circumstances that were beyond your control.
Note that FHA does not consider divorce an extenuating circumstance.
This is just a very general overview and other guideline nuances can apply. For more detailed information about your particular situation, consult with a qualified mortgage professional.
It’s also important to note that though these are the standard guidelines for Fannie Mae and FHA, lenders that underwrite to Fannie Mae and FHA guidelines might add their own more restrictive guideline overlays.