Can You Buy a House With an Eviction?

Homeownership is possible even with a past eviction, though it presents unique challenges. While an eviction complicates the mortgage application process, it does not automatically disqualify an individual from buying a home.

How Evictions Affect Mortgage Applications

An eviction can influence a lender’s decision when evaluating a mortgage application. Lenders assess risk, and an eviction might be viewed as an increased risk factor. While an eviction itself does not directly appear on a credit report, related issues, such as unpaid rent or property damages that go to collections, will. These collection accounts or money judgments can lower a credit score, which lenders heavily consider.

Lenders conduct background checks and tenant history reports, where an eviction record will appear. They may also contact previous landlords to gain insight into past rental behavior. If a loan is approved with an eviction history, it might come with less favorable terms, such as higher interest rates or stricter down payment requirements. Lenders may also require a formal explanation of the eviction circumstances and proof that any related debts were paid.

Understanding Eviction Reporting

Eviction records are public and accessible through court records. These records include details like case numbers and the judgment. Tenant screening databases compile eviction history from various sources, providing reports to landlords and mortgage lenders.

An eviction record remains on tenant screening reports for up to seven years. While the eviction itself does not directly appear on a credit report, any unpaid rent or fees sent to a collection agency will show up as a negative mark. These collection accounts can remain on a credit report for up to seven years from the date of delinquency.

Court records of eviction cases can sometimes remain accessible for longer than seven years, depending on local laws. Some jurisdictions offer procedures for sealing or expunging eviction records, but this often requires specific action. While a collection related to an eviction impacts credit, the eviction court filing primarily appears on tenant screening and public records.

Strategies for Homeownership After Eviction

Individuals seeking to purchase a home after an eviction can take several concrete steps to improve their prospects. Improving credit is a fundamental strategy, which involves paying all bills on time and reducing outstanding debt. Consistent on-time payments are a significant factor in credit scoring. Reducing credit utilization, the ratio of credit used to available credit, also contributes to a higher score; maintaining balances below 30% of the credit limit is generally recommended. If traditional credit is difficult to obtain, secured credit cards can help build a positive payment history.

Saving for a substantial down payment can significantly offset the perceived risk of an eviction history. Lenders may view a larger down payment, perhaps 10% or more, as a sign of financial stability and commitment. Developing a budget, setting up a separate savings account with automatic transfers, and reducing discretionary spending are effective ways to accumulate funds for a down payment. Exploring state and local home-buying programs, including down payment assistance initiatives, can also provide valuable support.

Addressing the eviction directly involves understanding the reason for it and being prepared to explain the circumstances to lenders. Lenders often appreciate a clear, concise explanation of what led to the eviction and what steps have been taken to improve financial habits since. If the eviction was due to an error, disputing inaccuracies on tenant screening reports or public records is a necessary step.

Seeking specific lenders can also be beneficial. Federal Housing Administration (FHA) loans, for instance, tend to have less restrictive eligibility criteria compared to conventional loans, often allowing for lower minimum credit scores, such as 580, and down payments as low as 3.5%. Some lenders specialize in working with individuals who have challenging credit histories. Time and patience are also crucial; the longer the period since the eviction, especially if positive financial habits have been established, the less impact it may have on lending decisions.