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Amanda Forrest
a year ago
My husband and I had to sell our previous residence via short sale where we were a few months delinquent in our payments. Our credit scores are in the 580 vicinity and we are currently renting, but found a very reasonably priced home we would like to purchase in the neighboring town, which would be less per month than our current rent. Do we have any options right now? Short sale was closed in Nov. 2015.
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Best Expert Answer
Joe Wallace
a year ago
FHA loan rules state, "A Borrower is generally not eligible for a new FHA-insured Mortgage if they relinquished a Property through a Short Sale within three years from the date of case number assignment.
This three-year period begins on the date of transfer of title by Short Sale.
(a) Exception for Borrower Current at the Time of Short Sale
A Borrower is considered eligible for a new FHA-insured Mortgage if, from the date of case number assignment for the new Mortgage:

--all Mortgage Payments on the prior Mortgage were made within the month due for the 12-month period preceding the Short Sale; and
-- installment debt payments for the same time period were also made within the month due.

(b) Exception for Extenuating Circumstances
The Mortgagee may grant an exception to the three-year requirement if the Short Sale was the result of documented extenuating circumstances that were beyond the control of the Borrower, such as a serious illness or death of a wage earner, and the Borrower has re-established good credit since the Short Sale."

USDA loan rules in HB-1 3550 state that a borrower with a short sale on the credit record will be subject to further credit scrutiny. However, in many cases you may find that credit between 620 -640 is required for lenders to work with you in these circumstances. You can call the FHA directly and request a referral to a local, HUD-approved housing counselor who can discuss your needs with you in the pre-purchase phase.
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