Do you have a short sale on your credit history? Here’s when you can qualify to buy again…

I’ve received multiple inquiries recently from Realtors who have clients that went through a short sale in their recent past and are wondering they’ll be able to buy again.  I thought I would put together a short post to help people navigate these inquires.

Please keep in mind that this information is based on underwriting guidelines today and are subject to change.

In general, a short sale is looked at more favorably than a straight foreclosure so that is the good news.

Depending on the circumstances of the short sale a borrower can qualify for FHA financing as soon as 12 months but they’d have to be able to demonstrate that the events that led up to the short sale were isolated (i.e. was their a non-recurring medical illness, did a family member pass away, or other circumstance that was both unforeseen and singular in nature?).  In talking with an underwriter about this exception it has to be a very compelling case and the application must contain other compelling compensating factors such as a good credit score, large down payment, low debt-to-income ratio, etc..

At the 2 year mark a borrower becomes eligible for conventional financing but must have at least 20% down (the MI companies are still minimum 4 years).

At the 3 year mark FHA is an option again but most lenders have a minimum 640 credit score requirement.

If you have a short sale in your history and would like to check into your eligibility for a new mortgage I would be happy to work with you to determine what would need to be done to put you in a position to buy again!