Mortgage After a Foreclosure in 2024

Mortgage After Foreclosure

How to Get a Mortgage After a Foreclosure

Losing a home through a foreclosure can be a troubling experience. Many that go through this process feel a sense of hopelessness about becoming a homeowner again anytime in the near future.

Fortunately, the opportunity to purchase a home again after a foreclosure is becoming much easier.  There are new programs known as “non-prime loans”, which do not require any waiting period to get a mortgage after a foreclosure.  This means that you may have an opportunity to get a mortgage even just 1 day after a foreclosure!

Please keep in mind that a mortgage right after a foreclosure will require larger down payments, and have higher interest rates than conventional and government-backed loans.  Therefore, it is important that you learn about all of your options, so that you can make an educated decision about what program makes most sense for you.

Here, you can learn about the different waiting periods, and other loan requirements, for non-prime loans, conventional loans, FHA loans, VA loans, and USDA loans below.

The Effects of Foreclosure on Mortgage Eligibility

If you have a foreclosure that is less than 3 years from the sale date of the foreclosed home, your ability to get a new mortgage will be limited. Unfortunately this is one of the most significant foreclosure consequences to overcome.

When you first begin having difficulty making mortgage payments, your first goal should be foreclosure prevention. This means making your mortgage payments a priority over every other type of spending other than food. 

Most lenders are unwilling to risk entering into a new mortgage with someone who had a foreclosure because they have a track record of not paying the mortgage. It will take a few years to prove based upon a positive credit history that you are responsible enough to enter into a new mortgage.

Rebuilding credit and demonstrating financial stability are crucial in improving the chances of getting a mortgage after foreclosure.

If you are able to find a home where the seller is willing to finance the mortgage, that will give you time to eventually qualify for a new mortgage refinance once you have met the traditional mortgage after foreclosure waiting period.

Mortgage After Foreclosure

Below are the requirements to get a mortgage after a foreclosure:

  • Non-prime loans do not require any waiting period after a foreclosure.  This means that you may be able to get a new mortgage even just 1 day after a foreclosure.
  • Some lenders have a minimum FICO score requirement around 600 after a foreclosure.
  • The minimum down payment requirement depends on the lender.  Some lenders offer non-prime loans with down payments as low as 10%, but it is common for the minimum down payment to be closer to 20% (or higher).

Would you like some help finding a mortgage lender?  We can help match you with a lender that offers non-prime loans in your location.

Click here to get matched with a mortgage lender

What Others are Saying About Getting a Mortgage After a Foreclosure

Experian.com – “Buying a home after a foreclosure is largely a waiting game.”  “Proving extenuating circumstances can shorten the wait.

Consumerfinance.gov –  “Carefully consider the costs and risks of the loan that you are offered, and weigh the costs of the loan you might be able to get now against the option to wait and build up your credit history before buying a home.

Upsolve.org – “No matter what your credit history looks like, you can get a home loan approval even after a foreclosure.

Foreclosure Mortgage Lenders with no Foreclosure Waiting Periods 

Below is a list of non-prime foreclosure mortgage lenders that offer an opportunity to get a mortgage only just 1 day after foreclosure:

Click to Get Connected With These Lenders for a Quote

1 – Acra LendingContact

Acra Lending offers a non-prime mortgage program that allows a borrower to get a mortgage 1 day after a foreclosure.

  • The minimum FICO score required is 575.
  • Loan amounts available between $150,000-$3,000,000.
  • DTI ratios up to 50%.
  • Up to 90% LTV with no MI (if you are 3 years from your foreclosure).  If you 2 years from your foreclosure, you may qualify for up to an 85% LTV with no MI.  If you are less than a year from your foreclosure, the maximum LTV you may qualify for is 75%.
  • Available in the following states: AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MT, NC, NE, NH, NJ, NV, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI, & WY

Click here to learn more about Citadel’s non-prime mortgage programs

2 – Angel Oak Mortgage Contact

Angel Oak Mortgage offers a non-prime mortgage program that allows a borrower to get a mortgage 1 day after a foreclosure.

  • The minimum credit score to qualify is 620.
  • Loan amounts up to $1,000,000.
  • DTI ratios up to 50%.
  • The maximum LTV is 90%.
  • Loan amounts up to $1,000,000.
  • Primary residences, second homes, and investment properties.
  • Available in the following states:  AL, AZ, CA, CO, CT, DE, DC, FL, GA, IL, IN, IA, KS, KY, LA, MD, MI, MN, MS, NJ, NV, NC, OK, OH, OR, PA, SC, TN, TX, UT, VA, WA and WI.

Click here to learn more about Angel Oak’s non-prime mortgage program 

3 – Greenbox LoansContact

Greenbox Loans offers a non-prime mortgage program that allows a borrower to get a mortgage 1 after a foreclosure.

  • You must have a 500 credit score or higher to qualify.
  • The maximum LTV allowed is 85%.
  • Loans are available up to $3,000,000.
  • This program requires full income documentation.
  • They offer this program in the following states: AZ, CA, CO, CT, DE, FL, GA, ID, IL, LA, MA, MD, MI, MS, NV, NJ, NC, OH, OK, OR, PA, TX,

Click here to learn more about Greenbox Loans non-prime mortgage program

Need Help Finding a Lender who can Help After a Foreclosure?

Working with a knowledgeable mortgage professional can help navigate the process and find suitable options for obtaining a mortgage after foreclosure.  If you would like some assistance we can help provide you with options to finance your home.

Click here to speak with a loan officer who can help

Foreclosure Waiting Periods for Prime Mortgage Loans

For borrowers who are not in as big of a hurry, it would be worth waiting until you are eligible for a conventional or government-backed loan (FHA loans, VA loans, and USDA loans).  The waiting periods are longer than they are with non-prime loans, but the loan terms are better (lower interest rates and smaller down payments).

Conventional Loan After Foreclosure

The rules for getting a conventional mortgage after you have foreclosed is that you wait 7 years. However, if there were “extenuating circumstances”, such as a job loss, or something else out of your control, this may be reduced to only 3 years.

Below are some additional requirements to get a conventional loan:

  • 620 or higher credit score.
  • Minimum down payment of 3% or 5% (depending on the program).
  • The maximum DTI ratio allowed is 45%.
  • Your loan amount must be within the conforming loan limits for your county.
  • If your down payment is less than 20%, you will be required to pay PMI (private mortgage insurance).

If you would like to see if you qualify for a conventional loan, we can match you with a mortgage lender.  If you would like to have a lender contact you, fill out this form.

FHA Loan After Foreclosure

The FHA rules state that you must wait at least 3 years before you are eligible for a FHA loan. However, there is an exception to this rule if there were “extenuating circumstances”, such as a job loss. You would also have to show some improvements to your credit since the foreclosure. In the event that the circumstances and credit improvements are satisfactory, you would only have to wait until after 1 year before you can apply for a FHA loan.

Below are some additional requirements to get an FHA loan:

  • 500 or higher credit score.
  • Minimum down payment of 3.5% (in order to qualify for a 3.5% down payment, you must have a credit score of 580 or higher.  With a credit score between 500-579, you would be required to put 10% down.
  • The maximum DTI ratio allowed is 43% but can be extended to 56.9%
  • Your loan amount must be within the FHA loan limits for your county.
  • FHA loans require you to pay FHA MIP (mortgage insurance premiums).

Would you like to learn more about the requirements to get an FHA loan?

If you would like to see if you qualify for a FHA loan, we can match you with an FHA lender.  If you would like to have an FHA lender contact you, fill out this form.

USDA Loan After Foreclosure

The USDA guidelines state that you must wait at least 3 years after your foreclosure before you will be eligible for a USDA loan. You will also have to show improvements to your credit since the foreclosure took place.

Below are some additional requirements to get a USDA loan:

  • 640 or higher credit score (if your credit is between a 620-639, you may still qualify, but it would require a manual approval by an underwriter).
  • No down payment required.
  • The maximum DTI ratio allowed is 41%.
  • A property must be located in a rural area in order to be eligible.
  • USDA loans require you to pay a guarantee fee, which acts similarly to mortgage insurance.

Would you like to learn more about the requirements to get a USDA loan?

If you would like to see if you qualify for a USDA loan, we can match you with a lender.  If you would like to have a USDA lender contact you, fill out this form.

VA Loan After Foreclosure

The VA guidelines state that you must wait at least 2 years after your foreclosure before you will be eligible for a VA loan.

Below are some additional requirements to get a VA loan:

  • You must be a veteran or active duty military.
  • No down payment required.
  • VA loans do not have a minimum credit score requirement.  It will depend on the lender’s minimum credit score requirement, which often is around 620.
  • The maximum DTI ratio allowed is 41%.
  • VA loans require you to pay a funding fee.

If you would like to see if you qualify for a USDA loan, we can match you with a lender.  If you would like to have a USDA lender contact you, fill out this form.

Mortgage Refinance to Save Home from Foreclosure

We receive calls from homeowners who are trying to refinance to save their home from foreclosure.  It would be helpful to refinance and depart from the current lender who has issued a notice to foreclose on your property. 

The most common types of mortgages (conventional, FHA, VA and USDA) will not allow a refinance with multiple missed or late mortgage payments in the past year. For most people, they are facing foreclosure because of their mortgage payment history.

If you have the ability to stop the process with the lender by catching up on your payments, that would be the best course of action. If you absolutely must refinance, we may have an option that would allow a refinance to save your home from foreclosure, but the interest rate will be higher.

How Long After Foreclosure Can I Get a Conventional Mortgage?

Conventional guidelines require a 7 year waiting period after a foreclosure. However, there are other mortgage options with a shorter waiting period of just one day after your foreclosure.

Can I Get a Mortgage Two years After Foreclosure?

You can get a mortgage two years after foreclosure and there is an option to qualify for a mortgage just one day after foreclosure.

How Long After Foreclosure Can I Buy a House

There is a mortgage program that will enable you to purchase a house just one day after foreclosure. Keep in mind that both the down payment and interest rate will be higher.

Do You Have to Disclose a Foreclosure After 7 Years?

Your lender will not be concerned whether you have a foreclosure that is over 7 years old. However, if a question is asked about your credit history, you should answer it truthfully.

If you meet the remaining lending requirements and guidelines, you should not be worried that the lender knows about a foreclosure that is more than 7 years old. It cannot he held against you during the underwriting process.

How do Underwriters Find Foreclosures?

During the underwriting process, lenders will search the CAIVRS system which has record of all credit events including foreclosures. So, even if the foreclosure does not appear on your credit report, it will be found during underwriting.

Can I Get a Mortgage Two Years After Foreclosure?

You may qualify for a subprime mortgage just two years after a foreclosure. These programs require a larger down payment and likely will also have a higher interest rate. Once you have passed the 3 year foreclosure waiting period for an FHA loan, then you can refinance for a lower rate.

Frequently Asked Questions:

Do I need to wait until my home is all the way through the process of foreclosure before I can apply?
Most lenders will need to see the foreclosure completed before taking your application, as if your home has not been fully foreclosed, it means that you still have an owner occupied home.

What are qualifying “extenuating circumstances”?
Depending on the lender and type of loan you apply for, most will consider any of the following to be eligible for this exemption: job loss, serious illness or medical issues, or the loss of a wage earner (that passed away).

Does a divorce count as an extenuating circumstance?
In most cases, the lender will not consider a divorce to be a qualifying extenuating circumstance.

What if I had a foreclosure and bankruptcy at the same time?
If you both foreclosed on your home, and filed for bankruptcy (chapter 7 or 13), the time will start from whichever occurred last. In most cases, the clock officially starts when the bankruptcy is discharged (not when it was filed).

How to I stop a foreclosure?
The best way to stop a foreclosure is foreclosure prevention. This means immediately begin to make current and past mortgage payments if the lender will allow. 

Do I need to rebuild my credit before applying for a mortgage after foreclosure?
Lenders do look for borrowers to have improved or rebuilt their credit despite having a foreclosure. They want to see that you are now financially responsible and ready to take your future mortgage payments seriously.

Are there specific lenders that specialize in mortgages after foreclosure?
There are specific lenders that specialize in helping individuals with a recent foreclosure. In exchange for the risk, they will likely look for a larger down payment and will have higher interest rates.

Statistics Related to Obtaining a Mortgage with a Foreclosure on Record

1. Approximately 14% of individuals who went through foreclosure are able to secure a new mortgage within two years.
2. More than 75% of those who experienced foreclosure successfully rebuild their credit score within five years.
3. In the United States, an estimated 320,000 people qualify for a mortgage after foreclosure every year.
4. Studies show that individuals who take proactive steps to rebuild their credit are 60% more likely to secure a mortgage after foreclosure.
5. The average interest rate for individuals obtaining a mortgage after foreclosure is around 1-2% higher than conventional rates

Mortgage After a Foreclosure