How Long Do I Have to Wait After Foreclosure Before Applying for a Mortgage Loan?

If you lost your home from foreclosure and are looking for options for buying again, here’s how long you will have to wait before reapplying for a mortgage loan. It varies based on the time of mortgage loan you need. Let’s look at some of the common ones.

Conventional Loan

The waiting period for a conventional loan through Fannie Mae or Freddie Mac is seven years.But if you can provide documented proof for extenuated circumstances, the waiting period can be reduced to three years.You will also be required to make a 10% down payment to be eligible for a new mortgage.

If you are putting a down payment of less than 20%, you will be needed to get private mortgage insurance or PMI. PMI conditions are much stricter than those imposed by Freddie Mac or Fannie Mae.

FHA-Backed Loan

The waiting period for an FHA-backed loan is three years. The FHA loan program also accounts for extenuating circumstances, although it does not specify the minimum time frame. It also stipulates that the borrower must establish a good credit score before seeking a new FHA mortgage loan.

VA Loan

After foreclosure, you must wait for two years to apply for a loan under the Veteran Affairs program. But if you can provide proof for extenuating circumstances, the waiting period can be brought down to one year. However, if the foreclosed loan was a VA loan, you lose any additional entitlement.

USDA Loan

The waiting period for a USDA loan is three years after the completion of the foreclosure. It allows for extenuating circumstances only if they are temporary and beyond the applicant’s control.

The CAIVRS List

The Credit Alert Verification Reporting System is a government-backed database that tracks people who have defaulted on their loans. If you have defaulted on a loan, your name will stay on the CAIVRS list for three years. Lenders do not approve loans to people whose names appear on the list.

What Are Extenuating Circumstances?

A medical emergency, death, and more can be considered extenuating circumstances because they are beyond your control. However, personal issues like divorce, drop in property price, and inability to sell a house is not be considered an extenuating circumstance.

The loan underwriter must prove the foreclosure was because of an event beyond their control and despite their best efforts.

A Better Solution

At Sell House Fast MKE, we can help you avoid the consequences that follow a foreclosure. Call us if you’ve been served a default notice and need to sell a house fast in Milwaukee. We’ll come to your home to make an offer within 24 hours. If you’re happy with our offer, we’ll buy your house in seven days and for cash.

We buy houses in Milwaukee as-is, despite their condition and location.

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