When will I be eligible to buy a home after a Short Sale??

So you’ve had a Short Sale and are wondering if you’ll ever be able to live the American Dream again by owning another home.  The answer is YES!!!  There are of course waiting periods before you’ll be eligible to buy another home, but it is possible.

If you’re using FHA financing you’ll be eligible to buy a home 3 years from the date of the Short Sale.  It may be possible to buy a home with no
waiting period using FHA financing if you didn’t have any late payments on the
mortgage (or any other consumer debt) within the 12 month period preceding the
Short Sale and you’re not taking advantage of the declining housing market.

If you’re using VA financing you’ll be eligible to buy a home 2 years from the date of the Short Sale.  As with FHA financing it may be possible to buy a home with no waiting period if you didn’t have any late payments on the mortgage (or any other consumer debt) within the 12 month period preceding the Short Sale and you’re not taking advantage of the declining housing market.  You also cannot have had the short sale against a VA loan.

If you’re using USDA financing you’ll be eligible to buy a home 3 years from the date of the Short Sale.  They do not have any exceptions to this waiting period.

If you’re using Conventional (Fannie or Freddie) financing, they generally have the longest waiting period depending on your down payment.  If
you’re putting 20% down, the waiting period is 2 years.  If you’re putting 10% down the waiting period is 4 years.  And if you’re putting less than 10% down the waiting period is 7 years!! Conventional financing will allow for a 2 year waiting period with 10% down if there were extenuating circumstances.  Extenuating circumstances typically are defined as “a nonrecurring event that was beyond the borrower’s control that resulted in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations”.  Typically this is defined as a serious illness or death of a wage earner.  Divorce or relocation does not qualify as an extenuating circumstance.

If you have questions about whether or not you qualify, please call Paul Wilcox at 763-746-9922 and he can go over your specific scenario.

If you are interested in getting on the Path to Buy and purchasing a home in this market, when rates are historically low, inventory is high and prices are have come down, contact Tammy Chevalier with Kelloer Williams Classic Realty at 612-850-0866 or myhometeam@kw.com

NEXT WEEK'S TOPIC:  HOW DO SHORT-SALES WORK AND IS IT
RIGHT FOR YOU?