I Just had to Short Sale my Previous Home. Can I Buy a New Home Now?

With short sales increasing as people are trying to avoid foreclosure, many of these families are wondering just how long they are going to have to wait in order to get a new home on a mortgage. This is a common concern as most people do not want to spend the next five years paying rent. The good news is that those who have had a short sale are going to be able to qualify much faster for a mortgage than those who just experienced a foreclosure since their credit is not in such bad shape. However, the bad news is that there is no clear cut answer in days, months or years in which a person has to wait in order to qualify for a mortgage after a short sale.

For those that are interested though, most lenders are going to follow guidelines that are set forth by Fannie Mae, Freddie Mac and the FHA on what their criteria is to qualify for a home loan after a short sale.

The FHA states that those who have a home that is still in default are still going to have to wait for around three years in order to qualify for a new mortgage. However, this wait is lessened if the borrower can show that they had circumstances that were beyond their control that contributed to the short sale of the home such as a death of the family who was the breadwinner for the family. They can also have the wait lessened if they have improved their credit score. If the person has no default on the previous mortgage, then they are able to qualify for a new mortgage right away.

The Fannie Mae industry states that there is a two year wait for those that want a new mortgage after a short sale, if they can afford to put twenty percent down on the mortgage. If the borrower can only afford ten or twenty percent, then they are going to have a four year wait in which they can then qualify for a new mortgage after their short sale. If the borrower puts down anything less than ten percent, then they are going to have a seven year wait before they can get a new mortgage. However, Fannie Mae does point out that they will listen to the circumstances that are involved, and if the circumstances are those that were out of the borrowers control, then they will reduce the wait time to two years.

Freddie Mac states that for all borrowers, there is a four year wait in which they can qualify for a new loan after a short sale. They will reduce this to two years if the person can show that they had circumstances beyond their control that led to the person having to short sale their home.

So the answer to how long you are going to have to wait in order to qualify for a new mortgage after your short sale completely depends the standards that your lender uses to evaluate people.