Assuming you can a 3% seller assist, otherwise that'll be an additional cost.
You'll also need a low DTI RATIO.
Also be sure to send you lender a complete file; application 1003, 2 years tax returns 2011 & 2010, last two pay periods check stubs, 6 months bank statements, authorization to run credit. Thats your basic application.
by the way obtain your 2011 & 2010 Irs transcripts your lender will love you for it. Send all forms in ay the same time.
This is indeed a realistic situation. You appear to be a good candidate for FHA financing. I highly recommend that you contact a lender for the actual pre approval.
I am happy to help if you are interested.
Senior VP of Mortgage Lending
Many of the newest Listings are setting the LISTING PRICE at a low number so that they can get multiple offers.
If play the game of Low-Balling, you will lose.
Being a Shortsale, you will need to employ a Realtor to represent you;
have them do a CMA to find out how realistic that List Price is.
If the Market Value of the house is $100,000, you can offer $105,000 with $5,000 back for Closing Costs and $5,000 down. Talk to your Reator and your Lender.
Good luck and may God bless