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Buying after a short sale

February 16th, 2012 2:09 PM by Sam Kader

Having a second chance is possible after a short sale. Here are the general guidelines:

If planning to use FHA financing; then:

  1. Home short sold cannot be a FHA loan
  2. 3 years waiting period from time of sell. This period has been waived under FHA back to work program.
  3. Sold home must not require deficiency payment for the difference
  4. 580 minimum credit score
  5. 3.5% down payment
  6. Short sale caused by extenuating circumstances and not just a person trying to take advantage of the market (by selling short and buying same type home at half the price). Please refer to item #2 above.

The last requirement of extenuating circumstances is where it gets cloudy. An extenuating circumstance, according to FHA is one of the following:

  1. Job loss or loss of income
  2. Sickness or illness of the main borrower
  3. Death of a wage earner
  4. Circumstances beyond your control

If you don't meet the above criteria for FHA; here are the time frames you have to wait before purchasing again for Fannie and Freddie:

-Fannie Mae Conventional 2 years with 20% down payment, 4 years with 10% down payment, and 7 years with less than 10% down payment.

-Freddie Mac - 2 years with extenuating circumstance and 4 years for financial mismanagement.  

 


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