How Long After Foreclosure Can I Get an FHA Mortgage?

An FHA loan lets borrowers with limited resources buy a house with a low down-payment.
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A home foreclosure represents an emotional and financial loss to young couples. Whether due to unemployment, death or divorce, losing a house presents financial obstacles for years to come. But there's some good news for those looking to purchase another house. The Federal Housing Administration (FHA) administers loans with low interest rates to those with a past foreclosure on their credit histories. Eventually, you will qualify for a new house and start over again.

FHA Foreclosure Rules

The FHA regulations state that a person must wait three years to the month from the date of the foreclosure before he can qualify for another FHA loan. The FHA may waive this requirement if there are extenuating circumstances. In that case, the applicant must present supporting documentation and a letter of explanation outlining the details of the extenuating circumstances.

Extenuating Circumstances

To qualify for extenuating circumstances, you must meet one of the FHA's criteria: serious illness, death of a wage earner or major catastrophe. The Administration does not accept divorce or job transfer as an exception or extenuating circumstance. In the case of divorce, the home must have been legally transferred to the ex-spouse before foreclosure occurred.

Biding Time

While you wait for your time period to expire, save money for your down payment. Most FHA loans require only 3.5 percent down on the house to qualify for a loan. You may qualify for a better interest rate if you place more money down on the home. Making a larger down payment of up to 20 percent eliminates a monthly private mortgage insurance payment, which lowers your overall monthly payment.

Repairing Your Credit

The FHA guidelines regarding the credit requirements post-foreclosure are strict, and expect to see a good use of credit after the foreclosure. Use the time following foreclosure to clean up your credit report, pay down your credit cards and remove collections from your reports. As your credit score increases, you boost your chance of being approved by the FHA loan underwriters for your mortgage application.

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