I had a short sale, can I buy a home?

I had a short sale, can I buy a home? Yes, but there are waiting periods for different types of financing. The terms “short sale”, "Deed-in-Lieu of Foreclosure", and “Preforeclosure Sale” are used interchangeably in this post and have the same meaning. This post will discuss the guidelines for Conventional, FHA, and VA loans.

For conventional financing, the waiting period is two years with a 20% down payment, four years with a 10% down payment, and seven years at maximum financing (5% down). It is possible to only wait three years with a 5% down payment, but an extenuating circumstance must be documented. Additionally, FHA and VA loans require a waiting period of three years; however, if an extenuating circumstance can be documented then it is only one year.

An extenuating circumstance defined by Fannie Mae is, “Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.” The definition is about the same for FHA and VA too. In order to prove an extenuating circumstance, you must provide documentation to substantiate your claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.)

If you had a short sale and want to buy a home seek a licensed residential mortgage loan originator who you trust will review your situation and then provide guidance to achieve the American dream of homeownership.

In Texas, contact Jimmy Smith for questions or a no obligation loan consultation.