Can I buy another house if I have been foreclosed?
Can you buy another home if you have gone through the foreclosure or short sale process? Well, it’s not going to be easy, especially if you need financing. But the Federal Housing Administration has some programs that could help you out. You could qualify for an FHA loan if you meet various criteria. For example:
1) It has been at least three years since you have owned any real estate that was foreclosed (including regular foreclosures and deed-in-lieu transactions).
2) You did a short sale, but you were current in your mortgage payments for the 12 months leading up to your short sale.
3) You did a short sale, and you were current on all installment payments (i.e. credit cards, etc.) for the 12 months leading up to your short sale.
On the other hand, you would be ineligible for an FHA loan if you fall in one of the following categories:
A) You did a short sale only to take advantage of the real estate market, and/or bought property nearby at a reduced price.
B) It has not been three years since you have had real estate that went through the foreclosure or deed-in-lieu of foreclosure process, unless you have significantly improved your credit since the foreclosure and the foreclosure was caused by certain circumstances beyond your control, such as the death or illness of one of the primary wage-earners involved. Failure to sell the real estate, divorce, and relocation, however, are not enough to get you an FHA loan.
C) You were not current on your mortgage payments for at least 12 months before you did a short sale, unless that was due to the death or illness of one of the primary wage-earners involved.
So all is not lost. Conventional financing, much of which is backed by Fannie Mae and Freddie Mac, may not be an option for you. You would have to wait 7 years after your foreclosure to qualify. But an FHA loan may be available to you in just 3 years. If you have been through, or are going through, the short sale or foreclosure process, be optimistic! You could be a homeowner again soon!