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FHA Loan Foreclosures: How Long Must a Borrower Wait To Apply Again?

November 5, 2013

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We’ve received a lot of reader questions in recent days about FHA loan eligibility issues, including queries on how long the borrower must wait after foreclosure on a previous FHA home loan before applying for a new FHA mortgage.

FHA loan rules address this issue in HUD 4155.1 Chapter Four, Section A. In the section titled, “Eligibility for FHA-Insured Financing”, we find the following guidance to the lender under the subheading, “Waiting Period for Borrowers With Past Delinquencies, Defaults or Claims on FHA Loans”. It says:

“If the borrower has had past delinquencies or has defaulted on an FHA- insured loan, there is a three-year waiting period before he/she can regain eligibility for another FHA-insured mortgage.”

This waiting period is mandatory, though borrowers should ask their loan officer or contact the FHA about how recent guideline changes under the FHA Back To Work program may affect this waiting period. Under Back To Work, some borrowers are given some added consideration for what the FHA terms an “economic event” that happened as a result of the recession.

Back To Work requires a borrower to undergo housing counseling and to submit paperwork showing the financial circumstances that resulted in bad credit (or worse) were recession-related.

Assuming that some borrowers may not qualify under Back To Work for a waiver of the required three-year waiting period, here is what the FHA loan rules say about that three year period.

“The three-year waiting period begins when FHA pays the initial claim to the lender. This includes deed-in-lieu of foreclosure, as well as judicial and other forms of foreclosures. Lenders should contact the Homeownership Center (HOC) having jurisdiction over the area where the property subject to default is located for information such as the

• date the claim was paid, and

• date of the initial default.”

It should be noted that the rules cited here apply specifically to situations where the borrower had past delinquencies or defaults on FHA home loans.” For more information on this issue, speak with a lender or contact the FHA directly at 1-800 CALL FHA.

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

Joe Wallace - Staff Writer

By Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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