If you are one of the millions of families that lost their home in the last couple of years to Foreclosure… you might think… Been There – Done That. But if you’re one of those folks who truly does want to purchase again, here’s some potentially good news. USDA Home Loan waiting periods after foreclosure are not as difficult as you might think!
The GREAT THING about USDA Home Loans, especially for folks who have gone through a troubling financial period – is that they don’t require a down payment (at all) and the Seller can pay the closing costs. This means that you don’t need a ton of cash to buy a house with a USDA Home Loan!
USDA says that they will allow you to purchase a new home to owner occupy, after foreclosure if you’ve done the following things:
- Wait 3 years from the date of the Foreclosure.**
- Re-establish Credit
- Have Credit Scores that meet the guidelines (as of the date I am writing this, that means you need a 620 score.)
Here’s the other part… you need to DOCUMENT what happened, and why you ended up in a Foreclosure.
** If the mortgage debt that was foreclosed, was included in a Bankruptcy – then the USDA Home Loan waiting periods after foreclosure “waiting period” of 3 years, starts from the date of the discharge of the Bankruptcy. Because it can take 6 months or more for Banks to process the Foreclosure, and transfer title, this is a tremendous plus.
MORE GOOD NEWS! If you’ve waited 3 years since you owned a home, the State of NC considers you a new home buyer! This means you might qualify for a Mortgage Tax Credit when you buy a house!
FHA Requirements for purchasing after Foreclosure
“FHA insured mortgages are generally not available to borrowers whose property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years. However, if the foreclosure of the borrower’s main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit…This does not include the inability to sell a home when transferring from one area to another.”
So you MIGHT be able to buy after two years, but we see VERY few exceptions made on this time frame.My “real life” answer to this question is… in today’s credit environment, it’s going to be HARD to get a Bank to loan you money for a home if you had your home foreclosed upon less than 3 years ago. I know what the guidelines say, but Bank’s do not have to follow guidelines set by FHA. Here are some FHA and VA Home Loan guidelines regarding waiting periods.
FHA does not say you must have a 620 credit score, but there are VERY few lenders who will allow you to purchase a home without at least a 600 score! There are some Banks that will not allow you to purchase with FHA if you have ANY late payments on ANY accounts in the last 12 months!
That’s not a FHA guideline, that’s a BANK rule, so again – I’d say – you might still be forced to wait 3 years, and have all of your documentation in order!
These guidelines are USDA Home Loan waiting periods after foreclosure are different from the Fannie Mae / Freddie Mac Conventional Guidelines… And these foreclosure guidelines are changing OFTEN… so I would not rely solely on information you get from an online site.
If you are considering a mortgage loan in NC, call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058 we’d love to help answer your questions about USDA Home Loan waiting periods after foreclosure !