FHA Loans After A Foreclosure

For those homeowners who are in distress and are unable to short sell their home or get a loan modification, the most common end result is foreclosure. As the foreclosure crisis continues on and many homeowners have either went through the foreclosure process or are facing foreclosure, one of the common questions that they ask is:

How long before I can get a mortgage loan again after foreclosure?

According to FHA guidelines (4155.1 4.C.2.f: Previous Mortgage Foreclosure):

A borrower is generally not eligible for a new FHA-insured mortgage when, during the previous three years

1. his/her previous principal residence or other real property was foreclosed, or
2. he/she has given a deed-in-lieu of foreclosure.

Exception:

The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure. Divorce is not considered an extenuating circumstance.

However, the situation in which a borrower whose loan was current at the time of a divorce in which the ex-spouse received the property and the loan was later foreclosed qualifies as an exception.

Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.

Remember, when getting an FHA loan after foreclosure - just because you wait 3 years doesn't mean you will qualify - all of the other criteria for a FHA loan still apply (credit score, income, assets, etc.)

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