News You Can Use

“How soon after a foreclosure can I purchase a home?”  This is a question I’m being asked more frequently.   The answer is: it depends.  As a general rule and assuming a positive credit history since the foreclosure:

Conventional loans will allow for a borrower to purchase a primary residence 3 to 7 years depending on whether the foreclosure was a result of extenuating circumstances or financial mismanagement.  Per Fannie Mae extenuating circumstances are “nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.” Borrowers would also have to provide documentation to support the extenuating circumstances such as a divorce decree, medical reports/bills, notice of job layoff, etc.

With FHA and USDA financing a borrower may purchase a new home 3 years from the date of the foreclosure sale. 

VA financing is the most lenient because they will allow for a new home purchase after two years have passed since a foreclosure.

Keep in mind that these are general time frames and the clock doesn’t start on the ‘recovery period’ until the foreclosure is finalized, not when the borrower moved out, was served foreclosure papers, etc.    A previous foreclosure doesn’t make future home ownership impossible, you just need to understand the options.