When Can I Get a Mortgage After Foreclosure?

Under the best of circumstances, you’re unlikely to qualify for reasonable home loan financing for at least two years after a foreclosure.

Many people who have gone through foreclosure wonder if they'll ever be able to buy a house again. Credit reporting agencies may report foreclosures in your credit reports for seven years, longer if you're seeking a loan for $150,000 or more. But sometimes, it might take less than seven years to get a new mortgage after a foreclosure. The amount of time you have to wait before applying for a new mortgage loan depends on the type of lender and your financial circumstances.

The chart below shows how long the waiting period is after a foreclosure for different kinds of loans, with more details below.

Loan Type Waiting Period After Foreclosure
Fannie Mae/Freddie Mac

Generally: 7 years

Extenuating circumstances: 3 years

FHA-Insured 3 years
VA-Guaranteed 2-3 years
Other Kinds of Loans 2-8 years

Also, a foreclosure will cause a significant decline in your credit scores, making it more difficult to get a new mortgage. The amount of that decline depends on the strength of your credit before losing your home. If you previously had excellent credit, your score will go down more than if you'd already had late payments, charged-off accounts, or other negatives items in your credit reports.

Waiting Period for Fannie Mae or Freddie Mac Loans After Foreclosure

Some mortgage loans adhere to guidelines that the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) set. These loans, called "conventional, conforming" loans, are eligible to be sold to Fannie Mae or Freddie Mac.

Before June 20, 2010, the waiting period for a new loan following a foreclosure was five years. Now, to qualify for a loan under Fannie Mae or Freddie Mac guidelines, you must usually wait at least seven years after a foreclosure.

Three-Year Waiting Period For Extenuating Circumstances

You might be able to shorten the waiting period to three years for a Fannie Mae or Freddie Mac loan if you had extenuating circumstances—that is, situations which are one-time only, beyond your control, and resulted in a sudden, significant, and prolonged reduction in income.

Generally, you have to:

  • show the foreclosure was the result of extenuating circumstances, like divorce, illness, sudden loss of household income, or job loss.
  • for Fannie Mae, have a maximum loan-to-value (LTV) ratio of the new mortgage of either 90% or the LTV ratio listed in Fannie Mae's eligibility matrix, whichever is greater,
  • for Freddie Mac, a maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit TLTV (HTLTV) ratio of the lesser of 90% or the maximum LTV/TLTV/HTLTV ratio for the transaction, and
  • use the new mortgage loan for either the purchase of your personal residence, or a limited or no cash-out refinance. You can't use the loan to buy a second home or investment property.

Waiting Period for FHA-Insured Loans After Foreclosure

To qualify for a loan that the Federal Housing Administration (FHA) insures, you must wait at least three years after a foreclosure. The three-year clock starts ticking from when the foreclosure case has ended, usually from the date that your prior home was sold in the foreclosure proceeding. If the foreclosure also involved an FHA-insured loan, the three-year waiting period starts from when FHA paid the prior lender on its claim.

Waiting Period for VA-Guaranteed Loans After Foreclosure

After a foreclosure, you'll typically need to wait two years to get a VA-guaranteed mortgage, though in some cases, you might have to wait for three. For example, if you lose your FHA-insured home to foreclosure, you might have to wait three years before getting a VA-guaranteed home loan.

Waiting Period for Other Kinds of Loans After Foreclosure

For most other types of loans, like subprime loans, the waiting periods can vary. Most aren't as lenient as FHA and VA lenders. The waiting period can range from two to eight years or longer. Other lenders might shorten the post-foreclosure waiting period, provided that you make a larger down payment—sometimes 25% or more—and agree to a higher interest rate.

How Your Credit Score Affects Your Chances of Getting a New Mortgage Loan

Notwithstanding the waiting periods, you have to establish good credit following a foreclosure before you can get another mortgage; your credit score must meet the lender's minimal requirements. Alternatively, while you might be able to get a new mortgage with a low credit score, you could have to make a larger down payment or pay a higher interest rate.

Which Credit Score Is Used for Mortgages?

FICO is the most common score used in the mortgage-lending business. Scores generally range from 300 to 850. FICO has many different scoring models, like FICO, FICO 8, and FICO 9. A person's score usually varies depending on the model used to produce it and which credit reporting agency provided the underlying credit report. Fannie Mae and Freddie Mac, for instance, generally require mortgage lenders to use the "Classic FICO" credit score to measure credit. The Classic FICO score is also called these names at the major credit reporting agencies:

  • Equifax Beacon® 5.0
  • Experian/Fair Isaac Risk Model V2SM, and
  • TransUnion FICO® Risk Score, Classic 04.

As of October 2020, Fannie Mae generally requires borrowers to have a credit score of 620 or 640, depending on how the loan was underwritten. Depending on the circumstances, Freddie Mac requires a score of 620 or 660 for a single-family primary residence. Of course, lenders may have requirements that are stricter.

A foreclosure might cause your FICO score to drop by a hundred points or more, perhaps below 550. So, even after the three-year foreclosure period, you might not qualify for FHA's low down payment loan, which requires a score of 580. You could still qualify for an FHA loan with a 550 FICO, but instead of making a 3.5% down payment, your down payment would be higher, at least 10%.

How to Re-Establish Good Credit After a Foreclosure

To re-establish good credit and boost your credit scores, you should:

  • pay your bills on time, consistently
  • keep your credit account balances low
  • monitor your credit report for errors and inaccuracies, and
  • maintain a small number of credit accounts.

Talk to an Attorney

If you have questions about mortgages or buying a home, consider talking to a real estate attorney. If you have questions about foreclosure, consult with a foreclosure lawyer.

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