Buying A Home After A Foreclosure Mortgage Guidelines

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Buying A Home After A Foreclosure Mortgage Guidelines

This BLOG On Waiting Period In Buying A Home After A Foreclosure Was UPDATED On December 10th, 2018

Many homeowners have lost their homes via foreclosure due to the financial and real estate collapse of 2008.

  • A foreclosure on credit report can drop credit scores by 80 points or more
  • The sudden drop of credit scores will increase as the foreclosure ages
  • Home buyers can qualify for home loan after foreclosure
  • Government and Conventional Loans have mandatory waiting period requirements to qualify
  • NON-QM Loans do not have any waiting period to qualify for mortgage but requires 10% to 20% down payment
  • Potential home buyers should re-establish their credit after foreclosure
  • There are many ways in boosting credit scores
  • One such way is by getting secured credit cards
  • Other ways of re-establishing credit is getting new credit such as auto loans and installment loans
  • Buying a home after a foreclosure is possible but there are certain restrictions

Obtaining Home Loan After Foreclosure

Home Buyers ready and interested in buying a home after a foreclosure must meet waiting period requirements with government and conventional loans.

Government Loans are the following:

  1. FHA Loans
  2. USDA Loans
  3. VA Loans

Waiting Periods On Government Loans After Foreclosure

There is a three year waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for FHA and USDA Loans.

  • There is a two year waiting period to qualify for VA Loans after foreclosure, short sale, or deed in lieu of foreclosure
  • Waiting period starts after the the deed of the house into the mortgage lender’s name or the date of the sheriff’s sale
  • Loan Officers at Gustan Cho Associates Mortgage Group specialize in helping borrowers with prior bad credit and high debt to income ratio
  • We originate mortgage loans and can help borrowers with credit scores under 600 as well as borrowers with open collections and judgments

Re-building Credit Is Key Buying a Home After a Foreclosure

For those folks who have recently gone through a foreclosure, they should start re-establishing their credit right away.

  • One of the many requirements lenders require for borrowers who had a prior foreclosure or bankruptcy is that they do not want them to have a late payment on their credit record after a foreclosure or bankruptcy
  • Make sure to make timely monthly payments
  • Get 3 secured credit cards and use them regularly
  • Keep in mind to always have credit balances below 20%
  • Maxing out credit cards will hurt credit scores
  • Do not apply for new credit too often 
  • Credit inquiries, hard pull, will decrease credit scores
  • Try not to apply for no more than two credit items in any six month period
  • Try to get an installment or car loan
  • For example, consumers who need to purchase a used car for $2,000 and have the cash to buy it outright, finance part of it by putting $1,000 down and finance the other $1,000

Mandatory Waiting Period After A Foreclosure

For those who cannot wait the 3 year mandatory wait period in buying a home after a foreclosure, they would need to have a family member purchase it under their name and credit.

  • Many home buyers have their parents purchase the home as a second or investment home
  • They can be on the title but not on the mortgage loan

If you have any questions in buying a home after a foreclosure please contact us at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.

Gustan Cho, NMLS ID 873293

Related> 2015 Waiting Period After Bankruptcy and Foreclosure

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