After Foreclosure - Can You Buy Another Home?

Real Estate Broker/Owner with Jonathan and Associates, Inc

For buyers who have faced a foreclosure event (foreclosure, short sale, or deed-in-lieu of foreclosure), you can buy a home again provided you complete the following.  

Original content by Eleanor Thorne NMLS 67179 Licensed in NC

It's Been A Roller Coaster RideIf you are one of the millions of families that lost their home in the last couple of years to Foreclosure… you might think…

Been There – Done That

You might not want to own a home again! 

But if you’re one of those folks who truly does want to purchase again, here’s some potentially good news.

USDA says that they will allow you to purchase a new home to owner occupy, after foreclosure if you’ve done the following things:

  • Wait 3 years from the date of the Foreclosure.
  • Re-establish Credit
  • Have Credit Scores that meet the guidelines (as of the date I am writing this, that means you need a 620 score.)

Here’s the other part… you need to DOCUMENT what happened, and why you ended up in a Foreclosure. 

“FHA insured mortgages are generally not available to borrowers whose property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years. However, if the foreclosure of the borrower’s main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit…

This does not include the inability to sell a home when transferring from one area to another.”  So you MIGHT be able to buy after two years. 

My “real life” answer to this question is… in today’s credit environment, it’s going to be HARD to get a Bank to loan you money for a home if you had your home foreclosed upon less than 3 years ago.  I know what the guidelines say, but Bank’s do not have to follow guidelines set by FHA. 

FHA does not say you have to have a 620 credit score, but there are VERY few lenders who will allow you to purchase a home without at least a 620 score!  There are some Banks that will not allow you to purchase with FHA if you have ANY lates on ANY accounts in the last 12 months!  That’s not an FHA guideline, that’s a BANK rule, so again – I’d say - you might still be forced to wait 3 years, and have all of your documentation in order!

These guidelines are different from the Fannie Mae / Freddie Mac Conventional Guidelines… And these foreclosure guidelines are changing OFTEN… so I would not rely soly on information you get from an online site. 

Call a loan officer.

If you are considering a mortgage loan in NC, call Steve and Eleanor Thorne, First Financial Services, 919-649-5058 we'd love to help answer your questions!

Comments (2)

Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

There is life after foreclosure or short sale.

Buyers need the right Realtor and mortgage broker on their side to help navigate the real estate market.

The right mortgage broker will guide the buyer through the credit repair process while keeping track of the changing loan approval guidelines.

Jan 29, 2011 11:25 PM
Kelly (Byrnes) Waugh
Fairway Independent Mortgage Corp - Cornelius, NC

This is excellent information.  Buyers need to know that it will take 3 years or longer, but its not the end all be all.  Partnering with a strong lender can help you and your clients become better prepared  for future purchases. 

Feb 28, 2011 09:09 AM