A lot of people going through foreclosure wonder if they will be able to buy a new home after the foreclosure case concludes. This blog post is designed to be a guide for when and how you can purchase your next home after a foreclosure and/or bankruptcy.
Hoping to buy your next “Home, Sweet Home” after a foreclosure or bankruptcy? You may have to wait. Here’s how long you should expect to wait before you can qualify again.
Note: These guidelines change frequently. These guidelines are good as of the date this post is published, but you should double-check with your lender before assuming that you will qualify for a loan.
Conventional Mortgage Guidelines
Conventional mortgages are insured by Fannie Mae. If Fannie Mae is unwilling to insure the risk that you will not repay your mortgage, then you likely will not qualify. You can reapply for a conventional Fannie-Mae-insured mortgage in the following circumstances:
- 7 years after your foreclosure case is concluded, as is reported on your credit reports.
- 4 years after a deed in lieu of foreclosure or short sale is completed.
- 4 years after your Chapter 7 bankruptcy is discharged.
- The shorter of 2 years after your Chapter 13 bankruptcy is discharged or 4 years after your Chapter 13 case is dismissed.
Fannie Mae’s guidelines are listed here. You also need good credit and a re-established payment history on your credit report.
FHA Guidelines
You can reapply for a FHA-insured mortgage in the following circumstances:
- 3 years after FHA pays the claim for insurance to your previous lender as the result of a foreclosure, short sale, or deed in lieu of foreclosure.
- 2 years after your Chapter 7 bankruptcy discharge (which is not the date you filed your petition).
- 1 year after your Chapter 13 bankruptcy discharge (which is not the date you commenced the Chapter 13 case).
In addition to the waiting period, you need a good credit score and a re-established payment history. Here are the guidelines promulgated by the FHA. Review the following sections of the above link for more information: 4155.1 4.C.2.g (relating to Chapter 7 bankruptcies), 4155.1 4.C.2.h, (relating to Chapter 13 bankruptcies), and 4155.1 4.A.2.g (relating to foreclosures).
Your foreclosure defense attorney told you all of this, right?
I prefer to give my clients as much information as possible so that they can determine whether defending a foreclosure, seeking loss mitigation, short selling the house, or pursuing alternative options is right for them. My primary goal with every foreclosure defense client is to help them get their life back on track. Let me help you get your life back on track. I offer a no-obligation-or-cost initial consultation for anyone in bankruptcy who thinks they may need an attorney’s assistance. Give Dickson Law Group a call at 815-317-5193 to set up an appointment.