Hi Jessica. Buying a short sale is no different than qualifying to buy a regular sale. The only difference between a short sale and a regular sale is that in a short sale the listing agent or seller's attorney goes into a negotiation process with whoever is servicing the seller's mortgage. This involves sending the bank the sales contract you and the seller signed along with other required documents from the seller, mostly to show their inability to pay the difference between your offer and the actual loan balance. This negotiation process can easily take several months, depending on how strong and realistic your offer is, and also who is handling the short sale negotiation.
Buying a foreclosure is just a bit different. In this case the seller is the actual bank who foreclosed on the previous homeowner. So your offer is sent directly to the person who decides in behalf of the bank, and if accepted you can then enter into a contract of sale. They'll usually require you to do a 203(k) loan, which is an FHA loan that finances up to 96.5% of the sales price and the amount needed to rehab or update the property. You'll need a licensed and insured contractor and may even need a HUD consultant.
The 203(k) loans are not only for foreclosures, it can be used for any type of sale, depending on the properties condition and your desire to upgrade it or not. Also, you don't ALWAYS have to do a 203(k) on foreclosure properties, from time to time you find some that don't really needing work and you can do a conventional or regular FHA by turning the utilities on, again this isn't true most the time but it does happen.
In all loan scenarios you'll need to qualify with your income, credit and assets. The best thing for is to meet face-to-face with a loan officer and see what you can qualify for, if you haven't done so already.
Senior Loan Officer
Sterling National Bank