Can You Get a New Loan after a Short Sale?
The answer is yes, if the short sale was your primary residence. The time frame differs depending on the type of loan, loan amount, and loan to value.
FHA is the easiest:
Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to:
FHA is the easiest:
Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to:
• take advantage of declining market conditions, and
• purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.
Borrowers are considered eligible for a new FHA-insured mortgage if:
• purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.
Borrowers are considered eligible for a new FHA-insured mortgage if:
• they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and
• the proceeds from the short sale serve as payment in full.
Eligible means immediately able to get a new FHA loan with 3.5% down payment!
If they were late on their mortgage prior and during the short sale process, they aren't eligible for 3 years from the date of completion. One key here is if the property they are purchasing is in the same geographical area as the one they did the short sale on, how do you prove it wasn’t a strategic default?
Fannie Mae:
80% LTV - 2 years
90% LTV - 4 to 7 years, probably 7 years because the mortgage insurance companies aren't willing to insure prior to 7 years
Freddie Mac:
80% LTV - 4 to 7 years
90% LTV - 4 to 7 years, probably 7 years because the mortgage insurance companies aren't willing to insure prior to 7 years
My take away on this is if you had a client do a short sale because of relocation, you are golden with FHA, if they were current on mortgage and other installment debt.
Otherwise assume your client will need 20% down and a recovered credit score.
• the proceeds from the short sale serve as payment in full.
Eligible means immediately able to get a new FHA loan with 3.5% down payment!
If they were late on their mortgage prior and during the short sale process, they aren't eligible for 3 years from the date of completion. One key here is if the property they are purchasing is in the same geographical area as the one they did the short sale on, how do you prove it wasn’t a strategic default?
Fannie Mae:
80% LTV - 2 years
90% LTV - 4 to 7 years, probably 7 years because the mortgage insurance companies aren't willing to insure prior to 7 years
Freddie Mac:
80% LTV - 4 to 7 years
90% LTV - 4 to 7 years, probably 7 years because the mortgage insurance companies aren't willing to insure prior to 7 years
My take away on this is if you had a client do a short sale because of relocation, you are golden with FHA, if they were current on mortgage and other installment debt.
Otherwise assume your client will need 20% down and a recovered credit score.
For more information, or to get pre-qualified, please contact:
Dennis Resse
Rancho Financial
858-876-4328
dennis@dennisreese.com
If you need to sell your home short or would like property information, do not hesitate to contact me!
Carylee Stone
Distinctive Properties
858-344-2632
carylee@stonehometeam.com
www.StoneHomeTeam.com
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