How Long Do You Have To Wait After A Short Sale?

The Answer Depends Upon A Few Important Factors

Posted: 2015-09-23 | Author: Richard Simon

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If you experienced a short sale and want to get another mortgage loan, you may be wondering how long you’ll have to wait. Due to new lending guidelines it may be as short as 1 year after the fact with a FHA home loan. Listed below are a set of guidelines to find out when you could qualify for a FHA home loan.

Zero Waiting Period

You may not have to wait to apply for a FHA-insured mortgage loan following the short sale if:

• You were not in default on the prior mortgage at the time of the short sale, and
• You made all of your old mortgage and other installment debt payments on time for at least 12 months leading up to the short sale.

Three Year Waiting Period

If you were in default on the old mortgage loan at the time of the short sale, then you must wait at least three years before applying for another FHA loan. The three-year waiting period starts to run from:

• The date of the short sale, or
• If the prior mortgage was also an FHA-insured loan, from the date that FHA paid the claim on the short sale.

One Year Waiting Period – Exception to the Three Year Waiting Period

You may be able to qualify as early as 1 year if you can show that extenuating circumstances caused the mortgage default. Extenuating circumstances might include:

• Serious illness or death in the family, usually involving a primary wage earner
• Divorce (in limited situations), or
• Job loss or 20% decrease in pay

You must also show that you had good credit prior to the event that caused you to default on the old mortgage. That means you should make all of your debt payments on time following the short sale.

When You Will Not Be Eligible for a New FHA Loan

Notwithstanding whether or not you defaulted on the old mortgage loan, you are not eligible for a new FHA loan if you were using the short sale simply to take advantage of cheaper housing prices. That means you cannot use the short sale as a way to get rid your old house in a declining housing market and buy a comparable house for a lower price.

If you have any further questions, give us a call at AZ Lending Experts, 480-649-3825.

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