A lot of people wonder how soon after a foreclosure they can purchase a new home. The answer can be very different for each homebuyer depending on circumstances. For the most part, foreclosure is very similar to bankruptcy when it comes to being able to purchase another home. The time to successfully find another lender is about 7 years, although with extremely good credit history, one might be able to secure a home loan within 5 years.
Managing Credit Debt is Key
Regardless of the amount of time that has lapsed since a foreclosure, lenders will not even entertain giving someone who has a foreclosure in their credit history if their credit rating is not good. Lenders want to see that those who have stumbled have taken steps to improve their financial and credit situation. The best way to do this is to demonstrate a good monthly payment history as well keeping debt within a health debt to income ratio.
Show a Good Rental History
Even if you were just making payments to a landlord, potential mortgage lenders want to see that you have been making consistent payments to someone. While not all landlords report to credit agencies, some lenders will consider a letter regarding a renter’s history from a landlord.
Under certain circumstances, people can purchase homes sooner than 5 years after a foreclosure. In general, if one can establish that their home was foreclosed due to illness, death, or disability, it’s possible to secure a new home loan within two to three years.