There is a ton of false and incorrect information flying around out there about this topic. In fact I'm seeing some incorrect direction on this forum. Fannie Mae sets the lending "standards" that most lenders follow. However, not ALL lenders follow the Fannie Mae guidelines. Fannie Mae rules stipulate that you must wait 3 years after a short sale unless you have "special circumstance" that caused the short sale. The only three special circumstances that I have seen so far are 1. Death in the immediate household 2. Forced work relocation of more than 100 miles 3. Military deployment. If you can prove one of the circumstances then you might qualify in as little as 2 years.
Here's where it gets cloudy. As mentioned, not all lenders follow Fannie Mae. For instance, there is a local lender here in Contra Costa County that will qualify you for a new mortgage THE DAY AFTER YOU SHORT SELL under certain circumstances. There are very few lenders who deviate from Fannie Mae because if they do then they will not be able to sell the loan. So it must be a portfolio lender. There are not very many but they do exist. I am not a loan agent. I am a realtor. But I can put you in touch with a loan agent IN Pleasant Hill who can set you up with what you need. Call or email me anytime and I'll put you in touch with him.
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It is also possible to get a mortgage loan the day after a short sale in some cases if you were never late on your previous mortgage payments. This however is somewhat rare as most banks required that you be late on payments to illustrate hardship.
It's a complicated world when it comes to mortgage loans and buying real estate. And it changes constantly. Feel free to contact me anytime for the latest scoop. Info is always free and I am not a salesman.
My Realtor turned me on the the Flexible Credit Loan, http://www.cfsflex.com. It seemed too good to be true, but I got approved and now have a pending offer, even after my short sale less than two years ago. Big banks said it could not be done.
Obviously it can.
Give me a call at 805-471-0828 or email me at David@Dnorwood.com and I will be happy to send you home listings based on you criteria. Or, you can go to my web site at http://www.dnorwood.com/SLO.aspx to view homes in real time.
David Norwood - Central Coast Real Estate
FHA- 3 years. Circumstances allow less than 3 years if the homeowner wasn't late during the shortsale or circumstances were outside the homeowners control.
Conventional- 2 years with 20% down, 4 years with 10% down or 7 years with no restrictions This is on page 451 of the Fannie Mae seller guide- https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sel022812.pdf
VA- 2 years as the VA states they treat foreclosures the same as bankruptcies for seasoning. Short sales aren't bankruptcies but since the VA reviews mortgage history in the last 2-years very closely, I don't see them releasing updated guidelines other than adding verbiage stating short sales are included.
Chapter 4 of the VA handbook
USDA- 3 years unless USDA's underwriting engine (GUS) approves you sooner. Typically 2-years with re-established credit. The USDA handbook has specific guidelines for debt that is paid off for less than what is owed, which a defaulted short sale falls under. I've found that GUS typically approves a client after 2-years of re-established credit but sometimes sooner.
Chapter 4 of the rural housing handbook
On government loans, especially VA and FHA loans, it's very important that the buyer does not have any derogatory credit items following a major event like a short sale.
If you are qualifying for an conforming mortgage, which most people refer to as a conventional mortgage, then you'll need to wait anywhere from 2 to 7 years depends on how much of a down payment you have. Conforming loan programs are loans made under Fannie Mae & Freddie Mac guidelines - which are a type of conventional mortgage (the most popular & common type of conventional mortgage). Jim put the link to those guidelines - as you can see if you have 20% down then it's just a 2-year wait, 10% down a 4-year wait, and with less than that (as little as 3% down) it's a 7 year wait. If there are extenuating circumstances, then at the 2-year mark it's just a 10% down requirement.
FHA financing has a 3-year waiting requirement, however less than 3 years (as little as 1 day) is permissible if you weren't in default on your mortgage on the time of short sale, weren't late on the mortgage or other installment debt (car loan, student loans, personal loans) for the 12 months prior to the short sale, and aren't taking advantage of declining market conditions by buying a similar or superior home in the same commuting area. Exceptions to being in default can be made (but rarely are) if there are extenuating circumstances surrounding the short sale. FHA financing can be done with just 3.5% down, no matter if someone has ever had a short sale or not.
VA & USDA financing have no published short sale guidelines, but most lenders apply FHA's guidelines except they permit VA financing after only 2 years, not 3 years, in the case of a defaulted mortgage at the time of the short sale.
Spend this time building up your assets. $15K down may not be significant enough. Do you also have funds for closing costs as well?