Many people want to know, “if I short sale my home, how long will it take before I can buy another home?”
It is a great question and the answer is, “it depends”. My lender gave me a nifty chart today. It outlines the types of “significant derogatory credit events” ( I love it when he talks dirty like that) and the waiting periods required before purchase.
For a short sale the waiting period is 2 years, if you purchase with 20% or more for your down payment. For a 10% down payment the period is 4 years and for less than a 10% down payment, the waiting period is 7 years.
Contrast this with a 7 year waiting period if you let your home go in a foreclosure.
In both short sale and foreclosure circumstances the wait period can be shorter with “extenuating circumstances”. These circumstances describe a catastrophic loss that was not in the control of the borrower. In other words, prove that it wasn’t your fault and they might let you buy a home sooner.
It is worth noting that the rules on this sort of thing are very fluid. What is accepted as fact today may not be fact 3 months from now- so take all of this with the appropriate caution. The banking industry is trying to figure out what considered acceptable risk in this new economy.