Can I Qualify For FHA Loan After Short Sale?

A short sale is when a homeowner has a mortgage with a mortgage balance that is higher than the value of the home and gets their mortgage lender’s permission to sell the home for a price below what they owe on the home. The process of a short sale can be time consuming and before a home can be listed as a short sale home, the homeowner’s mortgage lender needs to review the homeowner’s financials, the amount the homeowner’s owes, the market value of the home, and the homeowner’s potential future job stability and income.  A short sale is an alternative to foreclosure and by cooperating with the bank, the homeowner can get out of their home without their mortgage lender coming after them for the deficit or shortage from what they owe on their mortgage note and the price their homes has sold for. Homeowners who are currently going through a short sale or have gone through a short sale can qualify for a FHA Loan After Short Sale if they meet the mandatory minimum FHA Lending Guidelines with re-established credit and a minimum credit score of 580 FICO. 580 FICO minimum credit scores is what is required to qualify for a 3.5% down payment FHA home purchase loan.

Qualifying For FHA Loan After Short Sale

Once the short sale of your home is finalized and reported on your credit report, your credit scores will plummet by more than 100 FICO points. However, this drop is a temporary drop and as long as you have credit tradelines and maintain perfect payment history, your credit scores will increase as time goes by. If you do not have credit tradelines, then you should immediately get three to five secured credit cards and have at least a $500 credit limit on each of the secured credit cards. As you maintain a low credit balance on those secured credit cards and pay them on time, your credit scores should definitely improve. Mortgage lenders do not want to see any late payments after a short sale so make sure you religiously make your minimum monthly payments on time. One 30 day late payment will drop your credit scores and that payment history will be reflected on your credit report for seven years. To qualify for FHA Loan After Short Sale, there is a three year mandatory waiting period after short sale with re-established credit. The three year waiting period time clock starts from the date of the short sale that is reflected on your HUD Settlement Statement of the short sale. With waiting out the three year waiting period and having re-established credit with a timely payment history, you should qualify for FHA Loan After Short Sale with no problem. If you have a prior short sale and want to get the process of qualifying for FHA Loan After Short Sale prior to your waiting period, please contact me at 262-716-8151 or email me at gcho@gustancho.com. We can pull your credit report and make sure that there are no errors on your credit report as well as to see on ways of maximizing your credit scores.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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