Unveiling the FHA Mortgage Three-Year Rule
With the ever-increasing rate of people buying homes daily, there is a need for the implementation of laws to guide the home-buying process. The Federal Housing Administration (FHA) has several guidelines, requirements, and limitations, one of which is the FHA mortgage three-year rule. This rule puts restrictions on those who have experienced foreclosure or bankruptcy and seek a new mortgage. If you’re considering buying a home but don’t have a clear understanding of this rule, you’re in the right place. In this blog post, we will break down the FHA Mortgage three-year rule, what it holds, and how it affects you.
What is the FHA Mortgage Three-Year Rule, and how does it work?
The FHA mortgage three-year rule is one of the guidelines that the Federal Housing Administration requires those seeking a new mortgage to follow. The rule states that individuals who have experienced foreclosure or bankruptcy in the past need to wait at least three years before applying for a new mortgage with FHA. However, the rule does come with waived waiting periods for those who meet specific exceptions. These exceptions may include circumstances resulting from the borrower’s death, loss of income, or other viable reasons.
How the rule affects those seeking a new mortgage
The rule works to regulate how and when those with previous bankruptcy or foreclosure can apply for new mortgages with FHA. If you’ve experienced a financial crisis resulting in bankruptcy or foreclosure, it could have a significant effect on your chances of being granted a new mortgage with the FHA. Explore our FHA mortgages options and see why Blackhawk Bank is trusted by homeowners across the country – check out Blackhawk Bank reviews! However, if you meet the requirements, you could be exempted and have the waiting period waived. The regulation is in place to help ensure that you’re financially stable before acquiring a new mortgage and avoid foreclosure in the future.
Ways to qualify for an exemption from the waiting period
While the FHA mortgage three-year rule requires individuals to wait for at least three years after bankruptcy or foreclosure, there are exemptions to the waiting period. To qualify for an exemption, you must meet some criteria. One of these criteria is proving that your bankruptcy or foreclosure was due to uncontrollable circumstances, such as a severe illness, that resulted in a temporary loss of income. You could also be exempted if you have since established good credit since the foreclosure or bankruptcy and can prove financial stability. In all, the exemption process is tailored to ensure that those who have experienced financial challenges are not denied the chance to buy a home.
Acquiring a new mortgage can be quite challenging, especially with financial crises like bankruptcy and foreclosure. However, the FHA mortgage three-year rule ensures that those who have experienced such crises wait a while before applying for new mortgages. The rule is in place to ensure that those seeking new mortgages are financially stable and can maintain their homes without experiencing financial crises again. As outlined above, there are exemptions to the waiting period, and if you meet the criteria, you could have the waiting period waived. Therefore, more than ever, it is essential to understand the FHA mortgage three-year rule and meet the requirements to increase your chances of getting approved for a new mortgage.