Update: Buying a House after a Short Sale

There are many factors that will affect your ability to qualify for a loan in order to buy a house again after a short sale. If you have taken good care of your credit since, paid all your bills on time in the last 12 months, have money saved for down payment (as little as 3.50% to 20% down payment),  and of course, you have income to qualify after a short sale, then yes, it is possible to buy a house again in as little as 12 months to 36 months after a short sale.

How Long Do I Have To Wait After a Short Sale Before Buying a House?

Here are your loan options to buy a house after a short sale

Buying a House with an FHA loan one year after a short sale with 3.5% down payment

Did you know? FHA  announced on August 15, 2013 that  you may only need to wait one year to be able to buy again under the FHA’s Back to Work Program. FHA is willing to back loans for borrowers with as little as 3.50% down payment after having had a short sale, bankruptcy, or foreclosure. This is subject to guidelines such as having experienced an Economic Event which is beyond your control that results in a Loss of Employment, Loss of Income or a combination of both, which causes a reduction in the your Household Income of 20% or more for a period of at least 6 months. Note: If you did a prior short sale or were delinquent on a prior FHA loan, you will not be able to buy after one year with this program using an FHA loan.

With FHA’s prior guidelines, you can buy a home immediately after a short as long as the mortgage and existing debt has zero late payments in the past 12 months. Extenuating circumstances that lead to your short sale will also have to be documented such as certain hardships like job loss and subsequent job transfer/ relocation at least 2 hours drive time from prior residence, catastrophic medical bills (and/ or possible death) incurred by a member of the borrower’s “nuclear family.

Buying a House with a Conventional Loan TWO years after a short sale with 20% down payment

You can buy a house after  two years with a 20% down payment using a conventional loan. While waiting 2 years after your short sale, you should get to work on improving your credit rating and saving for down payment. Saving for a 20% downpayment not only helps you buy a home sooner after a short sale, but helps avoid expensive mortgage insurance on loans with less than 20% down payment. With Fannie/Freddie Loans, you will have to wait 4 years if you only have 10% down payment or possibly wait just 2 years if you have extenuating circumstances that lead to the short sale of your home.

Buying a House with a VA Loan TWO years after a short sale with Zero Down payment

You can buy a house after a short sale on a VA loan after 2 years for most lenders. For some VA lenders, the waiting period after a short sale can be as little as one month if you have not been late on any mortgage payments before  the final short sale and you have a 660 or better credit score. You might also qualify for an automated underwriting approval and get a VA loan.  Please work with a VA lender to see about your specific situation. Feel free to contact any of the lenders that you trust who are familiar with helping buyers with a short sale history. Let us know if you need us to recommend lenders that we trust who have successfully helped our buyers finance the purchase of their homes.

Buying a house in 2014 after your short sale in 2010, 2011 or earlier years

Those who have completed a short sale in 2009, 2010, 2011, and earlier years are most likely ready to apply for a loan after a  3 year waiting period has passed from the date of the short sale. You may now be able to buy a home again in 2014 and apply for a loan without consideration of any special circumstances. You will want to watch the video below and read the tips below to qualify for a loan after a short sale.

Article taken from January 25, 2014  by



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