I recently had a short seller ask me how long before they could buy another home? This is what I found out:
Provided a short seller was never in default on their loan (i.e. made payments right up to the sale), the answer could be that no wait is required. FHA may loan immediately in that situation. If the loan went into default prior to the short sale, the FHA waiting period is three years.
The answer for Fannie Mae depends on the amount of down payment the borrower is making on the new home. If the borrower puts 20% or more down, there is a two year wait after the short sale. If the borrower puts 10 to 20% down, the waits is 4 years and if the down payment is less than 10% the wait is seven years.
For Freddie Mac the waiting period is 4 years.
FHA, Fannie Mae and Freddie Mac will consider documented extenuating circumstances and this may reduce the applicable waiting period.
