Can I get a mortgage after a foreclosure?
Would you give someone a home loan soon after they were foreclosed? Not likely, and lenders feel the same way.
In practice, after a foreclosure lenders will typically refuse further financing for two to five years under guidelines established in June 2008 by Fannie Mae. In the usual case expect to wait five years. In addition, Fannie Mae has these requirements:
- The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representative credit score of 680.
- Purchase of a second home or investment property is not permitted.
- Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
- Cash-out refinances are not permitted for any occupancy. However, there may be exceptions depending on the nature of the foreclosure.
Was the foreclosure caused by medical bills, costs from an auto accident, or a business failure? Or, was the foreclosure caused by high living and reckless spending? For borrowers with an otherwise good credit history, a foreclosure which results from medical issues or an accident will certainly be viewed with compassion. In such cases it may be possible to get a new loan after a foreclosure in as little as two years.
If you’ve had a foreclosure that was not the result of foolish spending, it may make sense to speak with lenders — but come prepared with the paperwork to document what happened and why.
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