You can now do a short sale on your home and buy a new home without waiting three years. Prior to the new guidelines you were unable to buy a home with a FHA insured mortgage following a short sale of your primary residence. download FHA Guideline PDF
If you were current when your short sale is done you have every chance of buying a new home according to the new guidelines from the Department of Housing
from FHA guideline-
Borrowers are considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage
- All mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and
- All installment debt payments for the same time period were also made within the month due.
Lenders are not allowed to approve a new home purchase if…
from the FHA guideline-
-Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances.-
Another caveat is that if you are simply trying to take advantage of the market a new FHA insured mortgage will not be approved-
Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her 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.
Reference: For detailed information on converting existing principal residences into rental properties, see 4155.1 4.E.4.g
You can download the guidelines in a PDF format below here download FHA Guideline PDF
