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 non-prime loans 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.

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.

Non-Prime Loan After Foreclosure

Below are the requirements to get a non-prime loan 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.
  • Most non-prime lenders have a minimum FICO score requirement around 500.  However, there are some non-prime lenders do not have any minimum FICO score requirement at all (which means your credit score could be below 500).
  • 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

Non-Prime Lenders with no Waiting Periods 

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

1 – Citadel Servicing 

Citadel Servicing 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 500.
  • Loan amounts available up to $5,000,000.
  • 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 program

2 – Angel Oak Mortgage

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 500.
  • 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 program 

3 – Caliber Home Loans

Caliber Home Loans offers the Fresh Start Program, which allows a borrower to get a mortgage 1 after a foreclosure.

  • You must have a 580 credit score or higher to qualify.
  • They offer low down payment options.
  • Loans are available from $100,000 up to $1,000,000.
  • Available to finance a single family residence, condominium, co-op, 2-4 unit property, or PUD home.
  • They offer this program in the following states: AK, AZ, CA, CO, DE, GA, IL, KS, MA, MN, MS, MT, NH, NV, NJ, NY, OH, OR, RI, VA, and WA.

Click here to learn more about Caliber’s Fresh Start Program

Need Help Finding a Lender?

If you would like some assistance finding a 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

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%.
  • 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.

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).