The economic hardships that many families faced over the past several years resulted in many folks losing their homes due to foreclosure or short sale, as well as having to go through bankruptcy.
A short sale occurs when a home owner sells their home for less than what is owed to the bank. Becoming a home owner after a short sale is not as difficult as you may think.
A short sale has many benefits over foreclosure, one of the most important being the shortened time line before being able to re-enter the home buying market under certain circumstances.
Buy One Day Out of Short Sale
FHA will allow a home buyer to purchase a home 1 day out of short sale if the sale IF:
- The borrower was current on the mortgage at the time of the short sale
- The Short Sale occurred as the result of extenuating circumstances
Here are the guidelines for buying a home after Short Sale using the 3 most common loan types:
Conventional Mortgage
- You can buy a home 2 years after a Short Sale with a minimum 680 credit score and 20% down payment
- You can buy a home 3 years after a Short Sale with a minimum 680 credit score and 10% down payment
- You can buy a home 7 years after a Short Sale with a minimum 640 credit score with less than 10% down payment
FHA Insured Mortgage
- You can buy a home 3 years after a Short Sale with a 640 credit score and 3.5% down payment
VA Guaranteed Mortgage
- You can buy a home 2 years after a Short Sale with a 620 credit score and no down payment
- Due to the unique circumstances surrounding deployment and/or relocation of active duty military personnel, extenuating circumstances may have resulted in the short sale of the home. Check with your VA lender if you feel that your short sale occurred due to circumstances completely outside your control.
How to Buy a Home After a Short Sale was originally posted on Find My Way Home.
