How soon after a short-sale can I get a new mortgage?

How Soon Can You Get A Mortgage After a Short-Sale or Foreclosure

Depending on which lending institution you ask you will receive different time-frames allowed to purchase again after a short sale or foreclosure. The reason is most lenders have credit overlays, which translates into stricter underwriting guidelines than Fannie Mae and FHA have published.

There are lesser time-frames allowed if there are documented Extenuating Circumstances involved beyond the control of the borrower, such as serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.

Divorce, loss of employment, inability to sell the property and job transfer or relocation does not qualify for extenuating circumstances. All other events are known as Financial Mismanagement.

  • Conventional – Foreclosure – 7 years
  • FHA – Foreclosure: 3 years.  Exception: No waiting Period if the borrower was current on their mortgage and all other installment debt for the 12 months preceding the short sale, the new subject property is not in the same geographical area as the short sale, and the short sale lender accepted the short sale as payment in full.
  • USDA – 3 years. You may read of significantly less time, but the rules are so tough, it will never happen.
  • VA – 2 years minimum. Score over 640, otherwise 3-years
  • Conventional Short-sale 2-7 years: 2 years with 20% down, 4 years with 10% down (2 years with 10% with  extenuating Circumstance) and 7 years with less than 10% down or financial mismanagement.

I am using the current Fannie Mae conventional guidelines to close loans for Short Sale as of 6/20/2012.