How to Qualify for an FHA Mortgage After a Short Sale

Don't let a short sale stop your ownership plans.

Qualifying for an FHA mortgage after a mortgage short sale is possible. But your ability to get a mortgage insured by the Federal Housing Administration depends largely on how you managed your previous home loan. Short sales allow borrowers to sell their properties for less than the mortgage balance to encourage a quick sale and possibly avoid foreclosure. A short sale can damage credit ratings, but those who repair their credit can often qualify for a new mortgage in the future.

Instructions

1. Submit your application three years after the short sale. If you missed or skipped a few payments leading up to the foreclosure, FHA requires a three-year wait period on mortgage loans. Borrowers who submitted timely payments prior to the short sale can qualify for a mortgage in less time.

2. Provide an explanation for the short sale. Knowing the reason for requesting a mortgage short sale can help you qualify sooner for an FHA mortgage. Acceptable reasons for a short sale include loss of employment, divorce, death of breadwinner, illness and relocation.

3. Maintain a 620 credit score. You don't need the best credit score to qualify for an FHA mortgage loan, but you will need a score of 620 or higher. Pay your debts on time and get rid of credit card balances to help build your score after a short sale and get a new mortgage loan.

4. Stay employed for at least two consecutive years. Provide evidence that you're employed, and that you've maintained a steady income source for at least 24 months. Show copies of W-2 statements and tax forms.

5. Give the lender a down payment for the new mortgage loan. Down payment requirements for FHA mortgage loans are between 3.5 and 5 percent of the purchase price.

References

• FHA Home Loans: FHA Loan Qualifying Summary
• Total Mortgage Services: Buying A Home After A Short Sale with an FHA Mortgage Loan
• HUD: Let FHA Loans Help You