If you’ve experienced personal bankruptcy and have had to foreclose on a home, you may be wondering when you’ll be able to secure a mortgage in the future. While a foreclosure will affect your credit score, it's still possible to be a homeowner again. Learn more about what the process entails below.

How Does a Foreclosure Impact Your Credit?

A foreclosure will make a considerable impact on your credit and could drop your score by at least 100 points. Major credit reporting companies begin to track credit changes after you miss a single mortgage payment, and the eventual foreclosure can place your credit score below the range most mortgage lenders will consider. In general, mortgage programs require a minimum score of 540 to 640 for approval.

When Will You Qualify for a Mortgage After Foreclosure?

Fortunately, not all hope is lost if you've had a hit to your credit, such as personal bankruptcy or foreclosure. While you'll be required to wait before you can apply for a mortgage again, these time frames vary based on the type of loan you're pursuing and the factors surrounding your foreclosure.

FHA Loan

The US Federal Housing Administration (FHA) is the most lenient of all types of mortgages. It allows you to borrow up to 96.5% of the value of a home and only has a minimum credit score of 500. You must wait three years after a foreclosure before pursuing an FHA loan.

Fannie Mae/Freddie Mac

These government-sponsored lenders require a seven-year wait period, but if you can prove that your foreclosure resulted from extenuating circumstances beyond your control, you may shorten that period to three years. For instance, job loss that results in personal bankruptcy may be considered.

VA Loans

If you're a veteran or active member of the military, you'll only have to wait two years after a foreclosure before securing a VA loan. However, if you already used a VA loan to purchase the home on which you foreclosed, you'll lose your entitlement. To have it reinstated, you'll need to repay the full amount the VA paid out to the lender and wait two years.

Navigating homebuying after a foreclosure, personal bankruptcy, or other financial challenge can be daunting. Fortunately, the attorneys from Brian R. Cahn & Associates, LLC can help. Located in Cartersville, GA, this legal team has more than two decades of experience helping clients throughout Northwest Georgia navigate Chapter 7, Chapter 11, and Chapter 13 bankruptcy. Learn more about debt relief by visiting their website, or call (770) 382-8900 to set up a consultation.