Had a Short Sale – Do I now qualify for an FHA Loan in California?
Short sale is increasingly becoming a common option to sell a house in San Francisco (SF) Bay area and rest of California. A short sale is a transaction where a seller sells the property for less that what was owed. If you went through a short sale you could have this question – Do I now qualify for a loan? FHA recently came with a guideline on this question. Below are the highlights:
You are not eligible for a new FHA mortgage if you pursued a short sale agreement on your principal residence simply to
- Take advantage of declining market conditions, and
- Purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.
However you could be considered eligible for a new FHA-insured mortgage if
- You were current on your mortgage and other installment debts at the time of the short sale of your previously owned property, and
- The proceeds from the short sale served as payment in full.
If you were in default on your mortgage at the time of the short sale you are not eligible for a new FHA-insured mortgage for three years from the date of the short sale. Lenders may make exceptions to this rule under certain circumstances.
This guidance is effective immediately.
If you had a short sale and would like to find out what are your options with regard to buying a new home contact me. I will be glad to explore all options for you.