After a Short Sale- How Long Before I Can Buy a Home?

When Can I Buy?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.


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