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Short Sale and Foreclosure Waiting Periods

Performing a short sale can be stressful time in a homeowner's life, and when additional financial distress is involved, it can sometimes be difficult to see the light at the end of the tunnel.  Financial distress that results in foreclosure can also make it challenging to be optimistic about the future.

However, I've recently had several clients come back to me one, two or three years after we completed their short sale, having recovered financially, and now they're interested in purchasing another home.  Not only are they interested, but they also have the financial ability to purchase another home.  This is reassuring since it wasn't long ago that some of those clients had wondered if they would ever buy again.

I've experienced many situations where people have been financially able to buy a home again before the necessary short sale waiting period has passed.  This has led a lot of people to inquire about short sale waiting periods, or the amount of time they must wait after a short sale before they can get financing to buy another home.

The table below summarizes the required waiting periods after completing a short sale or after a foreclosure before someone can acquire financing to buy another home.  These short sale and foreclosure waiting periods may change from time to time and there may be other loan options available with shorter waiting periods, but this should serve as a good starting point for most home loans.  One recent change was the FHA short sale waiting period, which was changed from three years to one year.

Loan Type / Product Waiting Period After a Short Sale or Deed In Lieu Waiting Period After a Foreclosure
FHA ONE YEAR from completion date if borrower qualifies for the FHA "Back To Work" program. Otherwise 3 years.

ONE YEAR from completion date if borrower qualifies for the FHA "Back To Work" programOtherwise 3 years.

VA Not clearly defined.  Assume foreclosure rule of 2 years to be safe. 2 Years from completion date
Fannie Mae 2 Years with max 80% LTV ratio
4 Years with max 90% LTV ratio
7 Years with over 90% LTV ratio
7 Years from completion date
Freddie Mac 4 Years from completion date 7 Years from completion date
USDA Rural 3 Years from completion date 3 Years from completion date 
Jumbo Varies based on specific investor guidelines Varies based on specific investor guidelines


Authored by David Monroe, Real Estate Agent and Short Sale Specialist
Access Seattle area short sale help and find out 8 Things You Must Know Before You Attempt a Short Sale.
Phone:  (206) 905-8590

Copyright (c) 2013 by The David Monroe Team at Keller Williams Western Realty.

Published Thursday, November 21, 2013 10:37 AM by David Monroe

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Zerangue said:

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that you simply shared this helpful information with us.

Please keep us up to date like this. Thank you for sharing.

February 4, 2014 9:10 PM

Doris Schaefer said:

I have some questions about the short sale from the buyers perspective.  Could you answer those?

March 19, 2016 7:53 AM

Linda said:

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March 4, 2018 11:47 PM

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