Conventional Loans: Conventional loans can be conforming or non-conforming. Conforming loans are provided in accordance with the guidelines laid down by Fannie Mae and Freddie Mac. Non-conforming loan providers may not adhere to these guidelines. As per Fannie Mae and Freddie Mac guidelines, the borrower needs to wait for 5 years after completion of a foreclosure to avail a new mortgage, subject to establishing the desired credit score. A minimum FICO score of 680 is required and the borrower has to pay 25 percent of the purchase price of the home as down payment, failing which private mortgage insurance becomes necessary. In case of short sales, the waiting period is 2 years. Here short sales refer to selling the house at a price which does not cover the balance owed on a loan (for which the home is the collateral). In case of extenuating circumstances, the waiting period may be less than 5 years.

FHA Insured Loans: FHA insured loans are government insured mortgages. The government agrees to make mortgage payments, if the homeowner stops making payments. This insurance, which protects the lender from loss in the event of default, is a substitute for PMI or private mortgage insurance. PMI is a must if the amount of down payment for a mortgage is less than 20 percent. In case of FHA insured loans, the borrower needs to wait for 3 years, after completion of a foreclosure sale, to get a new mortgage subject to establishing the desired credit score. A minimum credit score of 580 is required to qualify for a FHA insured loan and the borrower has to put down 3.5 percent as down payment. In order to qualify for a FHA insured loan, the borrower’s income, assets and debts have to be fully documented. The house needs to be physically inspected and should meet the desired standards.

VA Insured Loans: Home loans guaranteed by the Department of Veterans Affairs (VA) are similar to FHA loans, with the exception that they are meant for veterans whose eligibility is based on the number of days of active duty and other service requirements. For the purpose of getting a mortgage after foreclosure, a 2 year waiting period is mandatory. In case of extenuating circumstances, as determined by the Department of Veterans Affairs, the waiting period may be reduced. For VA guaranteed loans, no down payment is required and no premiums have to be paid for mortgage insurance. However, 2 percent of the amount of loan has to be paid as funding fee.

Working on improving the credit score, avoiding credit card debt, making a budget and spending accordingly will help people re-establish a good credit score and in time make them eligible for a mortgage loan despite having a foreclosure on their