FHA Loan Foreclosure Waiting Period

Written by Steven PorrelloAugust 5th, 20224 minute read

How does foreclosure work? | Buying a home | Waiting period for FHA-insured loans after foreclosure | Extenuating circumstances | Summary | FAQs

If you foreclose on a mortgage from the Federal Housing Administration (FHA), the foreclosure waiting period is three years.

You can apply for a new loan, but you'll need to meet some basic FHA requirements to get approved. These include:

Waiting period
3 years after foreclosure
Credit score
580+
Debt collections
Removed from credit report
Bankruptcy
0 within past 12 months
Down payment
3.5%+
Debt-to-income ratio
<43%

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What is a foreclosure?

A foreclosure is a legal process that transfers property from a homeowner to another party, usually a mortgage lender or the government. They happen because the owners have stopped paying their mortgage or property taxes.

</p><ul><li>Loss or reduction of income</li><li>Loss of a spouse or partner who contributed income (divorce or death)</li><li>Too much debt, especially credit card debt</li><li>Unexpected expenses, such as medical emergencies or damages caused by natural disasters</li><li>Sudden relocation</li></ul><p>

</p><ol><li><strong>First missed payment:</strong> Lenders give you a grace period of 15 days to make up the payment. Afterward, they’ll charge late fees and report the missed payment to credit bureaus.</li><li><strong>Default:</strong> After the second missed payment, you’ve officially defaulted. Lenders will become more concerned and contact you more frequently.</li><li><strong>Delinquency:</strong> When 90 days have passed from your first missed payment, you’ll become delinquent on your mortgage. Lenders will send you a “demand letter” asking for full repayment. They’ll give you around 30 days to make up what you’ve missed (at this point, around three full monthly payments).</li><li><strong>Foreclosure:</strong> If you still haven’t paid your mortgage after 30 days, your lender will start the foreclosure process. At this point, you’ve missed four monthly payments.</li><li><strong>Home sale:</strong> Your lender files a claim with the FHA, which repays the lender, and the U.S. Department of Housing and Urban Development (HUD) takes possession of the house. You'll have to move out, and the foreclosed home is sold on the market or at a private real estate auction.</li></ol><p>

</p><ul><li>A foreclosure stays on your credit report for 7 years. This can affect how much money you can borrow in the future.</li><li>Your credit score can drop by 100–160 points after a foreclosure, which could take you three full years of on-time payments to repair.</li><li>You’ll have to wait up to 7 years to be eligible for a new mortgage, less for a government-backed loan.</li><li>When your lender sells the property, you might still have to pay taxes on it.</li></ul><p>

Can you buy a home after a foreclosure?

Yes, but you'll need to do these things first:

🗓 Wait. Every loan has a foreclosure waiting period. For FHA loans, it’s three years.

🚧 Rebuild your credit. While you’re waiting, focus on repairing your credit score. Get a secured credit card (a card with an initial deposit), pay your bills on time, and show lenders you’re responsible with debt.

💰 Save for a down payment. The larger your down payment, the less risky you’ll seem to lenders.

» LEARN: How to improve your credit report before applying for a mortgage

Waiting period for FHA-insured loans after foreclosure

The waiting period for FHA loans is three years after your lender receives the mortgage insurance payout for your foreclosure. You can check your claim status on the CAIVRS database.

Requirements for a new home loan after foreclosure

Loan type
Waiting period
With extenuating circumstances
Credit score
FHA
3 years (36 months)
1 year (12 months)
580
Conventional
7 years (84 months)
3 years (36 months)
620
USDA
3 years (36 months)
1 year (12 months)
640
VA
2 years (24 months)
1 year (12 months)
N/A

Extenuating circumstances

An extenuating circumstance is an unpredictable event that prevents you from paying your mortgage. If this event led to a foreclosure, the FHA may shorten or waive the waiting period.

What does the FHA consider an extenuating circumstance?
Divorce
Relocation
Death of an income-earning partner
Illness
Disability
Job loss*
No
No
Yes
Yes
Yes
Yes
* If you lost at least 20% of your income, 6+ months before your foreclosure

Divorce

The FHA generally doesn’t consider divorce an extenuating circumstance. However, if you paid your mortgage payments up until your divorce, and your partner acquired the property and later foreclosed on it, the FHA may waive the waiting period.

Short sale vs. foreclosure

A short sale occurs when you sell your home for less than the amount owed on your mortgage. Like foreclosures, you typically have to wait three years after the short sale before you can apply for an FHA loan again.

But there are exceptions. If an uncontrollable event caused you to lose your job or a source of income, then you might be able to waive the waiting period.

You'll have to show that your credit history has fully recovered (no late payment within the past 12 months) and that you had made at least 12 months of mortgage payments before the event knocked you off-track.

What credit score do you need for a new FHA loan after foreclosure?

An FHA loan requires a 580 credit score. But some lenders may want a higher score following a foreclosure.

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Summary

  • The foreclosure waiting period on FHA loans is 3 years after the day your lender is paid their mortgage insurance claim.
  • You may get an exception if you lost income due to the death of a partner, a severe illness or disability, or a layoff.
  • Before you reapply for an FHA loan, you must have a 580 credit score, a DTI ratio that’s below 43%, and a down payment of at least 3.5%.

FAQs about FHA loan foreclosure

</p><p>Borrowers have to wait three years before they can apply for an FHA loan after a foreclosure. With <a href="#ecs" onclick="globalTOCClick('#ecs');" data-link-type="jump-link">extenuating circumstances</a>, the waiting period could be shortened to one year or waived altogether. <a href="#waiting-period" onclick="globalTOCClick('#waiting-period');" data-link-type="jump-link">Learn more</a>.

</p><p>It takes the FHA around three to six months after the first missed payment to complete a foreclosure. <a href="#what" onclick="globalTOCClick('#what');" data-link-type="jump-link">Learn more</a>.

</p><p>Yes, you can apply for another FHA loan after foreclosure. You must wait three years, maintain a good credit score (at least 580), and have no bankruptcies within the past year. <a href="#buying-after-foreclosure" onclick="globalTOCClick('#buying-after-foreclosure');" data-link-type="jump-link">Learn more</a>.