For veterans and their families who have gone through a short sale in the past, they may find themselves in the position to buy a new home, but there’s often the question of how the purchasing process will go. After going through a short sale, there are certain requirements and time limitations in place, before another purchase using a VA-backed home loan can occur.
Although there are guidelines in place, it’s important for veterans to realize that in actuality VA loans are much easier to obtain after a short sale than many other types of traditional loan programs. In fact, even after a short sale, if you’re using a VA loan to buy a new home, there’s still no down payment requirement, nor is there the requirement that a buyer pay mortgage insurance.
Typically, the waiting period to get a VA loan after a short sale is two years, if you have made late payments leading up to the short sale. If you have not made late mortgage payments, there is no waiting period. Another standard requirement for many lenders is that borrowers have no late credit card payments for at least a year prior to the application for a VA loan.
Despite these requirements from many lenders, there are circumstances in which a veteran can get another loan within a year after a short sale occurs.
The following are some of the circumstances that may lead to a reduced waiting time, following a short sale:
- A veteran borrower may be eligible for a new VA loan without a waiting period if the borrower made all mortgage payments within the month that they were due, for a period of one year prior to the occurrence of the short sale
- Veterans who maintain a credit score of at least 660 might qualify for a VA loan immediately after a short sale, as long as the short sale is listed as being paid in full on their credit report. This means the mortgage provider can’t require repayment of the difference of the loan amount.
The following are circumstances that will require a waiting period of at least two years:
- The borrower isn’t eligible if they executed a short sale as a way of taking advantage of declining conditions in the real estate market.
- The borrower will have to wait at least two years after a short sale to apply for a VA-backed mortgage if they were delinquent on their mortgage at the time of the short sale, unless there are significant extenuating circumstances that lead to the receipt of automatic underwriting approval
- A borrower can’t be approved without a waiting period following a short sale if they had a previous bankruptcy or foreclosure, in addition to the most recent short sale.
For veteran borrowers who have experienced a short sale, it is certainly possible to sidestep waiting requirements, and become a homeowner again, within a reasonable amount of time. A short sale doesn’t have to mean long waiting times or the inability to apply for and receive another VA-backed home loan.
If you are interested in purchasing a short sale or applying for a VA loan, use the application form above or call 888-573-4496.
If you choose to have VA Home Loan Centers represent you in selling your home as a short sale, you can stop using our services at any time. VA Home Loan Centers charges no up-front fees to assist you with your short sale. Our partner real estate brokerages will charge a real estate commission but if the bank agrees to a short sale, this is paid for by your lender. VA Home Loan Centers is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change the terms of your mortgage including approving your short sale. It is recommended that you continue to make payments on your mortgage throughout the process. Should you default on your payments, you can see a negative impact to your credit report and your home could be foreclosed upon.