We have all been wondering what happens after a short sale. How long do we need to wait to purchase a new home?
My disclaimer would be that each case will be different and until we see the credit report and other documentation we cannot know if the borrower qualifies.
FHA GUIDELINES – as of January 2012
Short sales:
Short sale (mortgage was current at the time of recording/closing on a short sale):
No seasoning is required, if all payments on the mortgage and all other installment debt
were made within the month due for the 12 months preceding the short sale.
Regardless of the type of short sale, the borrower is ineligible for financing if the short sale occurred so that the borrower could:
• take advantage of declining market conditions, and
• purchase, at a reduced price, a similar or superior property within a reasonable
commuting distance
Short sale (mortgage was in default):
The short sale must have been completed at least 36 months prior to the application date.
An exception may be available if default was due to extenuating circumstances beyond
the borrower's control. Case by case – manual underwriter decision
• If the loan that was paid off was FHA-insured, the completion date is the date the
claim was paid to the short sale lender.
FHA loans require 3.5% down. Down payment can be gift funds from a relative. Seller may pay up to 6% of the sale price towards closing costs and pre-paid fees.
