In fact, it's much easier to qualify for a mortgage after a major credit event than you may think. It all depends on the circumstances of your foreclosure—and how you've managed your credit since. So if you want to get back out there, here's how to get a mortgage after a foreclosure.
How Long After A Foreclosure Can I Apply For A Loan?
When it comes to the necessary waiting period between going through a foreclosure and applying for a new loan, every mortgage program is a bit different. For a conventional mortgage, a borrower who experienced foreclosure is required to wait seven years, whereas the Federal Housing Administration and the U.S. Department of Agriculture require a three-year waiting period and the U.S. Department of Veterans Affairs requires a two-year wait.
How To Speed Up The Process
You can reduce the waiting period for landing a new mortgage by showing that the foreclosure was the result of a significant financial hardship from which you have recovered. Just keep in mind that ‘there is no one-size-fits-all when it comes to lenders dealing with this situation’. Every lender has different requirements aside from basic guidelines set down by the FHA, VA, USDA, Fannie Mae, and Freddie Mac.
How To Rebuild Your Credit
For a potential borrower, a major component of landing a new mortgage is demonstrating that you have bounced back from the financial hardship that caused you to default in the past. One way of proving that is rebuilding your credit and keeping it sparkling clean. To boost your credit score—lenders typically like to see a score of at least 580—pay bills on time and maintain low balances on credit cards.
How A Mortgage Advisor Can Help
Meet with an experienced mortgage adviser soon after your foreclosure so that you can begin to work on any other long-term issues that need to be addressed and fixed.
Once you've worked on getting your credit score over a particular threshold, you may need to conserve cash if your liquid reserves are too low, or pay down your credit cards if your debt-to-income ratio is too high.