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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.

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FHA Loan Articles

News and Updates for Homeowners

FHA Loans and Old Foreclosures

November 5, 2013 - There’s a question about FHA home loans that is more common these days for a variety of reasons. One version of that question goes something like this:

“Is a person eligible for an FHA loan if they had one 20 years ago that went into foreclosure?”

Past foreclosures are not necessarily a roadblock to a new FHA home loan, but it depends on the circumstances. FHA loan rules address the issue of past foreclosures on FHA home loans in HUD 4155.1, Chapter Four Section A, which says in part:

“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.”

The rules elaborate further, adding that the waiting period starts, “when FHA pays the initial claim to the lender.” That includes deed-in-lieu of foreclosure, “as well as judicial and other forms of foreclosures.”

The FHA tells lenders in these cases to contact the FHA Homeownership Center for information such as the
  • date the claim was paid, and
  • date of the initial default.”
If a borrower wants to apply for a new FHA mortgage and the mandatory waiting period is over, based on the criteria mentioned here alone the borrower should consider applying for a new loan. However, your current financial qualifications will be reviewed and the loan would be approved or denied based on these qualifications.

FHA rules in Chapter Four reinforce this, stating, “Although a borrower’s eligibility for an FHA-insured mortgage may be established by performing the actions described previously in this topic, the overall analysis of the borrower’s creditworthiness must
  • consider a borrower’s previous failure to make payments to the Federal agency in the agreed-to manner, and
  • document the lender’s analysis as to how the previous failure does not represent a risk of mortgage default.”
Any outstanding debts or unresolved financial issues as a result of a foreclosure could affect the FHA loan application. That’s important to keep in mind when planning for a new FHA home loan.