FHA Loans and Minimum Waiting Periods After Foreclosure: A Reader Question

• his/her previous principal residence or other real property was foreclosed, or

• he/she gave a deed-in-lieu of foreclosure.”

FHA loan rules permit an exception to this waiting period,  IF the foreclosure can be documented as being, “…the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.”

A common question about these exceptions involves divorce. Does the FHA view divorce situations as something that is beyond the borrower’s control and therefore worthy of an exception to the three year minimum waiting period?

According to Chapter Four Section C, “Divorce is not considered an extenuating circumstance. An exception may, however, be granted where a borrower’s loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.”

Potential borrowers interested in applying for an FHA loan for a new home purchase less than three years after a foreclosure should also know the FHA loan rulebook’s line about foreclosures that were the result of being unable to sell a home during a relocation due to a new job elsewhere or a job transfer to another area.

According to Chapter Four, Section C, “The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.” Discuss your specific circumstances with a loan officer to get help and learn what your FHA loan options may be.

Do you have questions about FHA home loans? Ask us in the comments section.