NOTE: These guidelines were changed in August, 2014 – See new guidelines here
Buy Again After Short Sale / Deed in Lieu of Foreclosure
TWO (2) Years up to Maximum 80% Loan to Value | 20% Down Payment
FOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
There may be additional closing costs to offset the added risk of reducing the waiting period, and this may also vary from lender to lender.
The good news is that it’s POSSIBLE
Possible doesn’t mean it’s going to be easy. One of the conditions of being able to buy again sooner is that the short sale or deed in lieu of foreclosure is properly reported on your credit report.
This is important because Fannie Mae uses an automated underwriting system called DU or Desktop Underwriter. Because this is an automated underwriting system, it will import your credit report and make a decision based only on what information is reported.
If items are reported in error, it could cause a false decision – on the other side, if items are excluded from your credit report (like the fact that foreclosure was avoided) this will also result in a false decision.
Also, it is not uncommon for investors like Fannie Mae to “allow” loans with exceptions or unusual conditions such as this, and many times they allow it with additional costs or restrictions to lenders, which means that sometimes these types of loans are not widely available and therefore it’s difficult to get information about them.
Do you have 10% to 20% down payment?
If you’ve worked hard to re-establish your credit and saved up enough money for a down payment, this should be great news! I would like to think that I do a pretty good job of staying on top of changes in the industry, but honestly, this one slipped by me for a couple of months.
If you think you may be eligible to buy again after short sale or deed in lieu of foreclosure and have a 10%-20% down payment, leave a comment below, drop me an email, phone call or chat live with a specialist here on the site.
Visit this article for more information about Buying Again after Bankruptcy, Short Sale or Foreclosure