University of Illinois Extension
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<< Dealing with Foreclosure

Life After a Foreclosure

Once a foreclosure is final, the financial and emotional turmoil is far from over. A family going through foreclosure will go through pain in the process. They will eventually become homeowners again with time. A researcher from Ohio State University found this in his research. ¹

Because there is time between your foreclosure and buying a new home, you will have time to make some smart solutions. Summer of 2008, Fannie Mae adopted new rules that lengthen the time from 4 years to now 5 years time period from completion date of foreclosure before a family can purchase the next house. In addition, the requirements that applies after 5 years and up to 7 years includes:

  • The purchase of a principal residence is permitted with a minimum of 10 percent down payment and minimum credit score of 680.
  • Purchase of a second home or investment property is not permitted.
  • Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at the time.
  • Cash-out refinances are not permitted for any occupancy type.
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