After a Short Sale, how long do I have to wait to buy a new home?

Dear Shari – I sold my home by short sale in 2010. I have a new job and would like to buy a home again. How long do I have to wait to do that?   Thanks – Mary

Dear Mary – The time you need to wait to buy a new home after a short sale (or foreclosure) depends in large part on how much the event impacted your credit score.  The maximum impact I’ve seen for a short sale is about 150 points.  Assuming you can get your credit score back to where it needs to be to qualify,  you can save a down payment, show the income and lack of other debts so that your “ratios” qualify you for a new loan,  here are the general waiting periods:

  • With Freddie Mac if you can show extenuating circumstances caused your problems and document income problems were beyond your control you may be able to qualify for a Freddie loan in 2 years instead of 4. 
  • The new FHA program potentially allows you to buy again after just a year.  It also requires hard evidence that the problems caused a drop of 20% or more and continued at least 6 months and were beyond your control and 12 months of solid credit behavior.  They also require you see a housing counselor.  FHA is advantageous if you qualify as it allows you to get a home with a low down payment.       
  • And remember, Federal and state agencies offer down payment assistance for first time buyers, which may include you if you haven't owned for three years.  You can find a list of some programs at www.hud.gov.

Good luck!

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