Getting Another Home Loan After Foreclosure

Are there home loans available for people after a foreclosure process? In a word, yes. But it may take time to rebuild your credit score and reach the point of "forgiveness" where a lender is willing to approve you. Here is a recent question we received by email that covers the topic of home loans after a foreclosure situation.

Reader Question:

My question is about buying a home after foreclosure. The home that was foreclosed on was not my principal residence. It was a shared flip. My business partner and I bought a fixer-upper in 2005, started to flip it and he bailed on the deal. I had to finish the job myself along with paying the mortgage to. I put it up for sale about the time the local market tanked. Reduced the price to rock bottom, nothing. So I listed it for rental. A renter moved in, paid a few months, then stopped paying. Got them out after three months and got another renter. Same deal. Tried a deed n lieu, short sale, you name it. Had no choice but to let it go. So it finally foreclosed in Nov 2008.

During this time I was living in another state for three years living in a nice home doing a lease to purchase. After all this, my question is: Can I still buy a home after this foreclosure, even though it was not my principal residence?

Our Response:

This is a question only a mortgage lender can answer for you. But I can tell you that they'll frown on the foreclosure situation, even though it wasn't your primary residence. A defaulted mortgage is a defaulted mortgage, in their eyes. Of course, if you're current on another mortgage, like your current resident, then that might mitigate the effects of the foreclosure. Likewise, if this was isolated event and you have an otherwise flawless credit history, it will be more easily "forgiven" by a lender.

I would say that yes, you'll be able to get another home loan after this foreclosure situation. But I cannot answer the "how soon" part of the equation.

Related article: Buying a House After Foreclosure