FHA Foreclosure Waiting Period
If you have a recent foreclosure in your recent past, you can still buy a home with a mortgage in the future. However, lending guidelines will require you to wait until the seasoning period has ended and the waiting period is different for FHA loans.
The FHA foreclosure waiting period is three years, but the start date will depend upon whether the loan on your foreclosed home was an FHA Loan.
*This is Foreclosure Waiting Period Chart for All Types of Loans
|Loan Type||Foreclosure Waiting Period|
When Does the FHA Foreclosure Waiting Period Begin?
The foreclosure waiting period for an FHA loan will differ depending upon whether your prior mortgage or the was an FHA loan or not.
If the loan for the foreclosed home was financed with an FHA loan:
The waiting period begins when HUD pays the mortgage insurance claim to the lender that was holding your prior FHA loan on the home that was foreclosed.
If the loan for the foreclosed home was not financed with an FHA loan:
The waiting period begins on the day when the sheriff’s sale of your home occurs. Unfortunately, there are times when the lender holds onto the property and delays the start date of your three year waiting period.
It may be possible to get an exception for the waiting period and we will outline how that works below.
FHA Foreclosure Guidelines
In addition to meeting the basic FHA loan requirements, borrowers who have a recent foreclosure in their history must also be held to the following FHA foreclosure guidelines.
- There will be a 3 year waiting period after the foreclosure unless extenuating circumstances can be met
- All borrowers on the mortgage application must have re-established a positive credit history since the time of the foreclosure
- Remove any and all collections from your credit report
- Pay down outstanding credit balances
- No late payments
- No recent bankruptcies
These are just the additional requirements that most lenders will follow if you are applying for an FHA loan after a foreclosure.
If you would like to improve your changes of getting approved, focus on improving your credit score and saving for a larger down payment than what is required. This will show that you have re-established yourself and are a solid candidate for a new mortgage.
Exceptions to the FHA 3 Year Foreclosure Waiting Period
In rare occasions, lenders are permitted to make exceptions to the FHA foreclosure waiting period. These are typically extreme circumstances which can be taken in to account. Some examples are as follows:
- Serious illness or death of the primary wage earner
- Ex-spouse failed to make the mortgage payments after the divorce
If the lender approves the extenuating circumstance, you still must have re-established good credit.
Circumstances that do not qualify for an exception:
- Job loss for any reason
- Unable to sell the home or make payments after a job relocation
Keep in mind that getting an exception for the FHA foreclosure waiting period is very rare and likely will not happen. It is worth asking a lender but it is important to know the chances of the exception getting granted are low.
Removal From the CAIVRS List
CAIVRS is the Credit Alert Verification Reporting System which tracks those who have defaulted on a government loan such as FHA, or even a student loan.
Your new mortgage will not be approved if you are still listed in the CAIVRS system for having had a foreclosure. Therefore, you will need to get removed from this list before you can get approved for an FHA loan.
It is still possible to purchase a home after a foreclosure if you are able to rebound by improving your credit and waiting until the FHA foreclosure waiting period has ended.
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