The answer to this question is a bit complex and there is not a 1 size fits all answer to this question. Also note that each lender can have overlays to the actual agency guidelines. The answer may vary lender to lender. It depends on a number of factors. First let’s consider what type of mortgage financing you’ll need for your purchase. FHA provides 96.5% financing, and is the selected loan for many homebuyers that don’t have sufficient funds or want to make a 20% down payment. VA provides 100% financing for Veterans with a qualifying Certificate of Eligibility. Fannie Mae or Freddie Mac Conventional financing is generally the loan used for homebuyers that are purchasing with a sizeable down payment and need financing up to the conforming loan limit ($417,000 in Indiana, Ohio and Kentucky). Jumbo loans are for buyers that need a loan in excess of the conforming loan limit.
Each of the loan types described above have rules for the origination of new mortgages after Short Sale without a Bankruptcy or Foreclosure Action filed…please call Jeff @ The Mortgage Network with over 24 lenders we can find you a loan for your new home! 888 393 8784 x10.
Rule 1: If borrower was current at time of Short Sale and had no lates on all mortgages and installment debts for the previous 12 months, a New FHA Mortgage can be originated immediately after Short Sale. For FHA the borrower may purchase a home at this time so long as the payments prior to the short sale where made on time and so long as he/she did not pursue a short sale simply to take advantage of declining market conditions, and purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.
Rule 2: If borrower was delinquent at time of Short Sale, the waiting period is 3 years from the closing date of the sale.
Rule 3. If the previous loan was an FHA loan, the waiting period is 3 years from the date the CAIVRS claim was paid.
VA does not provide any guidance on how long a borrower must wait post Short Sale to qualify for a new mortgage. However, most lenders have implemented a 3 year waiting period.
Fannie Mae / Freddie Mac Conventional Mortgages
1. Rule 1: 2 Years after the closing of the Short Sale, up to 80% LTV (20 percent down payment required)
2. Rule 2: 4 Years after the closing of the Short Sale, up to 90% LTV (10 percent down payment required)
3. Rule 3: 7 Years after the closing of the Short Sale, up to 95% LTV (5 percent down payment required)
The rules related to Jumbo Mortgages are determined by lender. There are no standard rules.
In addition to the above rules, the borrower’s credit score must be high enough to meet Fannie Mae, Freddie Mac, FHA or Jumbo lending requirements.
Also, we’ve found that most banks are coding the Short Sale as a Foreclosure on the borrower’s credit report. The code for a foreclosure is an M-9. The automated underwriting engines will pick-up this code and not approve the new loan. Therefore, prior to applying for a new mortgage, the borrower will need to have this professionally corrected on their credit report and this can be a 30-90 day process.
Please call us if you would like to explore how you can get back into ”Home Ownership in 2013” after the Short Sale!
Jeff Steinacker @ The Mortgage Network with over 24 lenders we can find you a loan for your new home! 888 393 8784 x10