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After a foreclosure, how long do I have to wait to buy another property?

Q: How long do I have to wait after a foreclosure to buy a property?

A: There is no wait to "buy a property" per se, as you can always pay with cash. However, if you need financing, the answer is "it depends." If you walked away from your last home it could take as long as seven years for you to again be eligible for a new mortgage from Fannie Mae or Freddie Mac, but recent changes after the housing market meltdown may shorten that time considerably.

Fannie Mae, Freddie Mac guidelines

If your foreclosure was the result of "Extenuating Circumstances," this waiting period could be as short as only three years for a Fannie or Freddie-backed loan, according to guidelines outlined in Fannie Mae Announcement SEL-2010-08 ("Underwriting Borrowers with a Prior Foreclosure"), but you'll need to come up with a 10 percent down payment, and your credit of course will need to be solid.

FHA guidelines

If the foreclosure was through no fault of your own -- you had a drop in income, job loss, etc. -- the FHA has instituted a "Back to Work" program where there may be a relatively short waiting period of perhaps a year.

To be eligible for this program, you'll have to been beset upon by an "economic event" which resulted in a loss of income of 20 percent or more for at least six months... and you'll have to have re-established credit for a minimum of 12 months (foreclosure has cleared, and no other derogatory incidents over that time span).

 You'll also have to take a HUD-approved housing counseling course.

Ask the expert
Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
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