After Foreclosure: How Soon Can You Buy?

With the rash of foreclosures across the country many people wonder exactly how a foreclosure will affect their home-buying power in the future. Chris Hutchens of Alpha Mortgage provides the following information on the waiting period most lenders follow. In all cases, borrowers must re-establish their credit, meaning they must meet minimum credit score requirements and eligibility requirements.

For buyers who’ve had a foreclosure the typical waiting period is 7 years. There is a three year exception, however, but borrowers must be able to show documentation for an extenuating circumstance, must have at least 10% for the down payment and the purchase must be for a primary residence.

Even if you didn’t go through a full foreclosure Fannie Mae has set requirements for the waiting period for Deed-In-Lieu of Foreclosure, Pre-Foreclosure and Short Sale to the same limits of:

•         2 Years – 80% Max LTV

•         4 Years – 90% Max LTV

•         7 Years – LTV Ratios Per Eligibility Matrix

And as with foreclosure, if you have a documented extenuating circumstance then you may be eligible to qualify for a two year waiting period if the Max LTV is 90%.

If you have experienced any one of these challenging financial events, please contact your mortgage lender to discuss exactly what your options are before trying to buy a home.