Just what is a short sale?  Is there a difference between a short sale and a foreclosure?  Is one better than the other?  How does one negotiate the short sale process.  Learn more about what goes on in a short sale in this episode of Valley Homes on TV.

“When am I eligible to buy again after a short sale, foreclosure or bankruptcy?”

This is an all too common question.  Many folks wonder when they might be able to re-enter the real estate market.

The answer depends upon the type of loan and who’s guidelines must be met.   The guidelines are frequently updated and have become more stringent in the past three years.  The following are believed to be accurate as of 5/1/2012, but should be verified.

FHA Waiting Guidelines

Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.

You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy.

Foreclosure - You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.

Short Sale / Notice of Default – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.

Credit must be re-established with a 640 minimum credit score

Conventional Waiting Guidelines (Fannie Mae)

Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your bankruptcy has been discharged for FOUR (4) years.

Foreclosure - You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,

Short Sale / Deed in Lieu of Foreclosure -

TWO (2) Years up to Maximum 80% Loan to Value | 20% Down Payment

FOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

Credit must be re-established with a minimum 660 credit score.

Fannie Mae has reduced waiting periods in cases of extenuating circumstances –

Preparing to Buy Again after BK, Short Sale or Foreclosure

Quite often there are things left over on your credit report that can delay your ability to qualify.  Checking your current credit report is a good place to start.  Dealing with any errors is easier to do before you’ve found a home you want to buy.