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How to Buy a House After Home Foreclosure

The foreclosure rate in the United States has been on a steady decline since its peak in 2010 when nearly one in every 200 housing units had a foreclosure filing. In 2021, that number has dropped to just over one in 1,000, according to data from RealtyTrac.

Nevertheless, if you consider buying a house after a home foreclosure, you are not alone. The good news is that there are ways to buy a house even if your credit history is less than perfect. Working in the real estate industry as a mortgage broker for over 20 years, I had a chance to help people with different financial situations, and I’d like to share some practical tips on how you can buy a house after your financial crisis. 

Financial Crisis: What does a home foreclosure mean?

A home foreclosure is a situation in which a lender attempts to recover the balance of a loan from a borrower who has defaulted on their mortgage payments. In most cases, it is a lender who initiates the process after the borrower has missed a certain number of payments, typically three to six months. If the borrower is unable to catch up on their payments, the home is sold at auction and the proceeds will be used to pay off the outstanding loan balance. And in this case, the borrower is responsible for any remaining balance. 

As a result, home foreclosures can have a significant impact on credit scores and may make it difficult to buy a house and obtain new financing in the future.

In addition to foreclosure, there can also be such situations as a short sale and bankruptcy.

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  • Bankruptcy happens when someone is unable to repay their debts. It is usually a long-lasting court process started separately from your mortgage payments situation.
  • A short sale occurs when a homeowner sells their property for less than the outstanding balance on their mortgage. This can be a difficult and stressful process, as it requires the cooperation of the lender. 


In fact, a short sale may have a less negative impact on your mortgage opportunities compared to foreclosure and bankruptcy. In some situations, when you cannot pay your mortgage costs, a short sale may be a good non-bankruptcy option and even become a way out. 

To understand this problem deeper, let’s analyze these three cases in terms of different mortgage programs. It is important to analyze the policies existing for each mortgage type to know how soon you can actually apply after your home was repossessed. 

How Long After Foreclosure Can I Buy a Home?

Depending on the mortgage program and financial issue, there are different policies. I’ve decided to show the details by highlighting the four most popular mortgage programs, such as Conventional, FHA, VA, and No Doc.

Conventional Loan

Usually, a Conventional program is a smart choice for homebuyers because it provides a flexible payment structure. Talking about financial cases the following policies are applied:

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  • Foreclosure – it stays on your credit history for 7 years from completion
  • Bankruptcy – depending on the Chapter, from 2 to 4 years from discharge/dismissal
  • Short sale – it takes 4 years from completion


FHA Loan

The Federal Housing Administration program is extremely popular among first-time homebuyers. Its requirements are more affordable than most mortgage programs have. And here are its policies to consider: 

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  • Foreclosure. Repossession stays on your credit history for 3 years from the completion date. FHA pays the initial claim and clears CAIVRS (the database of federal debtors)
  • Bankruptcy. Depending on the Chapter, from 1 to 2 years.
  • Short sale. It has no impact in the case when all the mortgage payments are made for the 12 months period.


VA Loan

This is a program for people connected with military forces. It provides the most beneficial terms for veterans and their families, and its policies are more loyal than the previous ones. 

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  • Foreclosure – 2 years from the foreclosure date
  • Bankruptcy – depending on the Chapter, from 1 to 2 years from discharge/dismissal
  • Shortsale – 2 years from completion


No Doc Loan

It’s one of the most popular programs among homebuyers who do not want to show any income or tax reports. Besides, it is a very good option for those who plan to buy a house after bankruptcy, just take a look at the details below.

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  • Foreclosure – it stays on your credit history for 7 years from completion
  • Bankruptcy – no waiting period (you can start financing after a day out of bankruptcy)
  • Shortsale 2 years from completion


So, to summarize everything mentioned above, here is how it looks:

Program / Repossession caseForeclosureBankruptcyShortsale
Conventional7 yearsFrom 2 to 4 years4 years
FHA3 yearsFrom 1 to 2 years
VA2 yearsFrom 1 to 2 years2 years 
No Doc7 years2 years


3 Tips on Getting a Mortgage for Buying a House After a House Foreclosure

Being in circumstances when you plan to buy a house after financial problems leading to foreclosure, try to consider the following tips to improve the situation:

1. Talk to your lender

There is a chance to improve the situation by discussing your payment opportunities with your lender. You can agree on paying the required amount to diminish the negative impact on your credit score. There are always some options, and you should take an active position in this situation. 

Remember that lenders are interested in collaboration with you more than stating a legal process and suffering losses. There are a lot of cases when lenders do not report foreclosure and come up with options. 

2. Give it some time

It is important to remember that the older foreclosure is, the less impact it has on your financial situation. 

Don’t be in a rush, take your time to analyze the market and wait for several years to get more chances for better mortgage terms. 

3. Ask for expert advice

After a house foreclosure happened you should carefully follow your credit history progress not to make more mistakes. Paying on time and working with an expert mortgage broker will help you move closer to your goal of buying a house. 

Remember that under similar circumstances everyone’s situation is different. The main task of an expert is to offer the best program for you. For example, people who do not want to show their financial documents can apply for a No Doc program being highly popular in the US. Your key task is to find a reliable partner for this question. 


As far as you can see, everyone may have tough times. Definitely, such cases as foreclosure or bankruptcy harm your financial situation, and there are strict policies to be met to move forward. But it doesn’t mean that you don’t have options. There are many opportunities when you are open and supported by information and experts in the industry. 

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