Foreclosed owners ask: ‘When can we buy again?’

More than 4 million homes have been lost to foreclosure in the last six years, and many of those former homeowners are now starting to ask:

When can we buy again?

Many banks have guidelines that prevent them from issuing loans to people with a foreclosure or short sale in their credit history in some cases for as much as seven years. That also doesn’t factor in the damage foreclosures and short sales can do to a person’s credit score, and the work former homeowners’ will need to do to repair it so they’ll have a better chance at qualifying for financing again in the future.

Still, some former homeowners, particularly those who foreclosed or did a short sale due to extenuating circumstances like a job loss or illness, are finding the wait may not be as long as they were once told.

The wait-time varies among lenders and government entities. For example, the Federal Housing Administration says former homeowners with a foreclosure must wait three years before they can qualify, while Fannie Mae and Freddie Mac require a seven-year wait following a foreclosure.

As for short sales, sometimes these waits can be waived or drastically cut, depending on the borrower’s situation. FHA requires a three-year wait following a short sale, but it may waive that wait if the short sale was due to a job loss.

Also, for borrowers who can come up with a higher down payment on their next home purchase, they may also not have as long to wait. For example, Fannie Mae will reduce the wait from seven years to two years for borrowers who come with a down payment of 20 percent or more.