Foreclosure and future marriage - will we be able to buy a new home?

It won't affect hubby's credit. It will affect your ability to buy a home. He can buy but you won't qualify. Deed in lieu of foreclosure is still a foreclosure on the credit. Sorry! By the way 3 years after the home transfers into new owners name you will once again be able to try to buy- as long as credit is PERFECT after the foreclosure.

DO NOT do a deed in lieu of foreclosure keep making small payments and if needed, rent out 1-2 bedrooms!!! or do a 1031 on the house

Your foreclosure won't affect your husband's credit score, in the sense that it's not going to lower his score, but it will affect your buying power as a couple. When it comes to borrowing, whether it's a mortgage, car loan, store credit for furniture, if you want an income to be considered, the person's credit will be considered as well. In other words, your fiancee's income will need to be able to solely support any future purchases that require borrowing money, or you'll risk be saddle with a high interest rate if the application for credit isn't denied all together. It takes at minimum two years before a bank will even start to consider lending for a mortgage when there's a foreclosure on file.