Buying a House after a Short Sale in 2013
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
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. 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 2 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 qualify for an automated underwriting approval and get a VA loan. Please work with a VA lender to see about your specific situation.
Other Tips in Buying a House After a Short Sale
What You Should Work On To Be Eligible to Buy A House After A Short Sale
- Pay all your bills on time and improve your credit scores over time to be at least 620
- Request a copy of your credit report and correct any inaccuracies as early as possible with the credit reporting agencies. You may visit annualcreditreport.com to obtain a copy of your credit report.
- To find out your exact waiting period after a short sale, find out when the claim was paid on your prior mortgage after a short sale.
- While renting, save as much money as you can for a down payment.
- Keep a steady job/ income to qualify for a new loan.
- If you would like to qualify for as much as you can to buy your dream home, hold off from signing up to new monthly obligations such as car loans, credit card payments, etc.
- Receive homeownership counseling or a combination of homeownership education and counseling provided that each participant receives, at a minimum, one hour of one-on-one counseling from HUD-approved housing counseling agencies. A list of agencies can be obtained online at http://www.hud.gov or calling: 1-800-569-4287. This is required to be completed 30 days before applying for a loan using FHA’s back to work program.
Was your prior short sale a strategic default?
A strategic default is when you sold your home to take advantage of the housing market’s past decline and purchased another similar or better house at a reduced price, which is within commuting distance to the house you previously sold. If the short sale of your home was a strategic default then you would have to wait 7 years to qualify for a loan to buy a home again.
Buying a House with FHA loan after a Strategic Default Short Sale
If you did a strategic default as defined above on your primary residence: you may not qualify for a 3.50% FHA Loan in the foreseeable future!Your option: you will have to save more money for down payment and get a conventional loan instead that requires 20% down payment and wait up to 7 years. Unless, the rules and guidelines change in the meantime.
Buying a House with Conventional loan after a Strategic Default Short Sale
If you did a strategic default on your primary residence and would like to use a conventional loan to buy a house, you will have to wait 7 years to buy a house again.Unless the rules and guidelines change in the meantime.
Buying a House with a VA loan after a Strategic Default Short Sale
If you have late payments prior to the short sale, expect most lenders to tell you that you are going to have to wait a minimum of 2 years and have no late payments on any credit account in the last 12 months before applying for a VA loan.