When can I purchase a home after a short sale?
Generally the answer will depend on how much down payment you have and what type of mortgage loan you want to obtain. However, there is not a one size fits all answer to this question. Each lender can have overlays to the actual Fannie Mae or FHA Agency guidelines; The answer may vary lender to lender. Ask the lender you are working with if their guideline differs from the agency guideline and if they don't know what you are talking about, move on to another loan officer.
Answers to the 4 following questions will help your loan officer guide you:
- Were there late payments?
- Current credit scores?
- Down payment (%)?
- Type of loan?
Deed-in-Lieu/Short Sale: No waiting Period
If the borrower was current on their mortgage and all other installment debt for the 12 months preceding the short sale, the subject property is not in the same geographical area as the short sale and the short sale lender accepted the short sale as payment in full.
Deed-in-Lieu/Short Sale: 3 Years
It is treated as a foreclosure if the borrower was late on the mortgage and other installment debt for the 12 months preceding and at the time of the short sale. In addition, if the borrower pursued the short sale to take advantage of the declining market or purchased at a reduced price a similar or superior property within a reasonable commuting distance.
These are the most current guidelines published by the two government agencies without credit overlays attached. These guidelines are also what Prime-Lending follows. Laws and guidelines change and new policies and packages are introduced, so check with your local lenders for current updates on federal laws.
Again, there is no answer that will fit all situations. As a general rule of thumb the following applies:
For Conventional loans, you will need 2 years from short sale with 20% down.
For FHA loans, you will need 3 years.
For VA loans you will need 2 years.