Purchasing using a Conventional Loan
– Must wait at least 2 years to purchase another property and must put at least 20% Down
– After 4 years, can purchase with 10% Down
– After 7 years, the guidelines will go back to the regular LTV’s (Loan-to-Value), which is a 5% Down Payment
– If extenuating circumstances are provided, then after 2 years, home could be purchased with 10% Down
In summary, your Buyers are going to need to wait at least 2 years (regardless of circumstances) and put more money down than what is typically required.
Purchasing using an FHA Loan
– Buyers must wait at least 3 years to purchase another property (unless they meet one of the two exceptions below)
– Exception #1: If Buyer is purchasing in “a different geographic area”, they are able to purchase right away
– Exception #2: If Buyer was on time with their payments at the time of the short sale, and they are downsizing, they may purchase in the same geographic area right away
– For both scenarios above, 3.5% is the minimum Down Payment
The definition of “a different geographic area” will be up to Underwriter discretion, but for a general rule of thumb, the property will need to be at least 50 miles away, with possible exceptions below that.
Courtesy of Danny Forbes | Loan Officer | Sterling Savings Bank