Can I Buy Another Home After a Foreclosure or Short Sale?

The simple answer to this question is 'Yes'. However, depending on what caused the foreclosure there may be different waiting periods. Most homeowners believe that any type of foreclosure action will not allow them to purchase a home in the future. Fannie Mae, the 800-pound gorilla in the conventional mortgage financing market, has published the following waiting guidelines effective August 2008 (the majority of lenders comply with Fannie Mae guidelines for all conventional loans):

Foreclosure
5 year time period from completion date (potentially 7 years)

Exception for Hardship - Foreclosure
3 year time period from completion date (potentially 7 years)

Deed-in-Lieu of Foreclosure
4 year time period from completion date (potentially 7 years)

Exception for Hardship – Deed-in-Lieu of Foreclosure
2 year time period from completion date (potentially 7 years)

Preforeclosure Sale (Short Sale)
2 year time period from completion date

Bankruptcy (all except chapter 13)
4 year time period from date of dismissal/discharge

Chapter 13 Bankruptcy
2 years from the discharge date, or 4 years from the dismissal date

Exceptions for Hardship – All Bankruptcy Actions
2 year time period from date of discharge/dismissal

Multiple Bankruptcy Filings - 5 year time period from date of recent discharge/dismissal

Exception for Hardship – Multiple Bankruptcy Filings
3 year time period from date of recent discharge/dismissal

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf

Note above that a hardship is considered an 'extenuating circumstance' by Fannie Mae. These are circumstances that are out of your control that severely affect your ability to pay.

Specifically regarding short sales, if you are current on your mortgage and you, or a qualified Realtor, successfully negotiate a short sale you 'may' be able to purchase another home with NO waiting period. This is often difficult to do and a majority of lenders may not agree to these terms, but it is worth mentioning.

Before you agree to any foreclosure action make sure you are well aware of the future impact it may have on your ability to purchase another home. Talk to a 'Certified Distress Property Expert' (CDPE) who can help guide you along the way. A properly negotiated short sale may save you time, money, and heartache.

J.D.A.