Is it possible to get a loan immediately after a short sale in case of relocation?

Asked by Rebecca, Pleasanton, CA Thu Apr 12, 2012

My husband has been out of job for around 20 months now. We kept our mortgage current for the first 1 year until we can't do it anymore. He got a job offer recently and has to relocate to Raleigh NC. We are going to short sell our house. The housing price in NC is so much lower than CA that we can probably pay 50% down on a house with some help from our families. Will bank approve a loan if we put a huge down payment after a short sale of our current home?

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Conder Realty, LLC’s answer
Conder Realty…, , Raleigh, NC
Thu Apr 12, 2012
Most lenders say that it takes 2 - 3 years before you can qualify for a mortgage after a shortsale. The problem is that you have to stop payment on for 90+ days to get the shortsale approved and this kills your credit. If you have solid income and a 25% or more down payment, you can pursue a company that does manual underwriting for their loans. These are based on the equity in the property. They are hard to find and becoming obsolete.
0 votes
, ,
Sat Jan 25, 2014
Important Back to Work Definitions

HUD announced several key terms that must be reviewed in accordance with this program.

•Economic Event: an occurrence beyond the borrowers control that resulted in a Loss of Employment, Loss of Income or a combination of both which resulted in a loss of Household Income of 20% or more for a period of six or more months.
•Onset of Economic Event: the month of the start of or loss of income.
•Recovery from an Economic Event: the re-establishment of acceptable or satisfactory credit. Satisfactory Credit equates to no derogatory credit for any mortgaged or leased property in the 12 months preceding the mortgage application. This also includes any installment or revolving debt for the same period.
•Borrower: “Borrower” includes all parties including primary and/or co-borrower as listed on the loan application.
•Borrower Household Income: the income of all parties on the application or Household Members as listed from the previous Economic Event and derogatory credit.
•Housing Counseling: Counseling from a HUD-approved housing counseling agency related to home ownership and meets acceptable requirements.

If you feel that you might qualify or have any questions regarding this new FHA Back to Work mortgage program, then please give us a call.

Joel Lobb (NMLS#57916)
Senior Loan Officer
502-905-3708 cell
Fill out my form!
0 votes
Bill Eckler, Agent, Venice, FL
Sat May 11, 2013

Keeping it real......getting financed immediately after a short sale is highly unlikely, even with a large down payment. We just don't see this happening. Getting financed after only a year is highly unusual since it generally takes 2-3 years at best before lenders will give you serious consideration.

You do have other options including: owner financing, lease options, renting. I know this isn't what you want to hear but it's real...

Best wishes,

0 votes
Patti Kane, Home Buyer, Boulder, CO
Sat May 11, 2013
I had a short sale last year and my Realtor recommend for a home loan. I am very happy to be able to purchase again.
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Ncgrandfather, Both Buyer And Seller, Raleigh, NC
Sun May 13, 2012
Rebecca, first I want you to know I'm not a Banker, Realtor or Builder. I know many of good ones thought. Now to my point, there is still a very large inventory of New Homes on hand and with a large Down Payment Builders have been known to Finance the homes. Also Lease to Own ect, ect,. Money still talks regardless. Wish you the best of luck.....
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Brandon Will…, Agent, Cary, NC
Tue Apr 17, 2012
If you can, keep your payments on the old home current until you close on the new one. With that you have to qualify for both payments at the same time, and if you are already behind it wont work. The other issue with this is lenders do not like to give you a mortgage when you just start a new job, they usually want you to be there six months.

Once you short sale, foreclose, or have a substantial delinquency you are going to have a REALLY hard time getting financing for 24 months from the date it goes through. If you are presently behind on your mortgage it is probably not feasible to buy right now in your name.

If your family qualifies for an investment property loan, they could purchase a home here and rent it to you until you can buy it from them. This is completely legal, they are buying the home for the purposes of renting it, and they can certainly rent it to you! I help parents do this for their college students all the time, its a great financial move for them AND you do not have to feel like a renter!

I have a great mortgage lender that you can bounce ideas off of AND I love to be creative to help people reach their goals. You can reach me at 919-278-7700 or via the email link.

0 votes
, ,
Fri Apr 13, 2012
I do mortgages that are underwritten for the secondary market. If you have late payments on your current mortgage that starts one clock, a short sale starts another one on conventional loans but maybe not on an FHA loan, it depends on how it was reported on your credit report. Portfolio lenders are not required to use the same guidelines.

Help from a relative is nice but don’t call it something it isn’t. A loan is a loan and a gift is a gift, if you call a loan a gift it is fraud and all involved can get hurt. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes
Venita Peyton, Agent, Raleigh, NC
Fri Apr 13, 2012
The question about borrowing money from family will pique the interest of mortgage lenders and maybe not in a good way.

You could consider giving yourself breathing space by renting for a couple years first. This will give you a chance to get acclimated to the various towns and subdivisions. Another option is allowing a family member to purchase a small place that you can rent back from them with the intention of eventually purchasing.

Regrettably, the short sale may harm your credit, and some employers are looking at this before and during the employment process. IMO it might be better to rent out your CA property (even for a small loss) until you are firmly on your feet here in NC.
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Preston Mill…, Agent, Raleigh, NC
Thu Apr 12, 2012
Yes and No. Bank no. We have private money that will do a 50% LTV depending on price level up to 400k but you are looking at 6-8 percent loan vs traditional 4%. 2 years from close of short sale but you have to repair your credit which means you will need above a 620 FICO in 2 years. It is possible but difficult. Let me know if I can help.
0 votes
Bo Bromhal, Agent, Raleigh, NC
Thu Apr 12, 2012
I am assuming that a 50% downpayment here is smaller than how much underwater you are on your house in CA?

I'm not a mortgage lender or expert, but I'm assuming that unless you pay the deficiency of your CA home out of that 50% you mention, the answer is no for 2 years.
0 votes
Shanna Rogers, Agent, Murrieta, CA
Thu Apr 12, 2012
Hi Rebecca,

Most lenders will not lend until 2 years after a short sale. However, maybe you can check with some Mortgage Brokers to see if any might be able to do something to assist you.

Shanna Rogers
SR Realty
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