If You Sold Your Home in a Short Sale, Here Is When You Can Get a Conventional Mortgage Again
If you sold your home in a short sale and you're wondering when you can get a conventional mortgage again, this one is for you. I'm Jason Sharon, a licensed mortgage broker, and I want to give you a clear rule and one question that puts it to work.
Daniel's situation
Daniel is a fictional homeowner near Loris, SC. He is an illustration, not a real client. He completed a short sale, and now that he's thinking about buying again, he keeps hearing different answers. One person says four years. Another says two. Nobody has told him which date the clock starts from.
A situation like this comes up often. The numbers people quote are not random, but without the rule behind them and the date they apply to, they are hard to use.
What the guideline says
For a conventional loan, the Fannie Mae Selling Guide, B3-5.2-03, reads:
"A borrower is eligible four years after completion of a short sale or pre-foreclosure sale. Extenuating circumstances may reduce the waiting period to two years."
That one passage explains why Daniel has heard two numbers. Four years is the standard waiting period. Two years is the reduced period that may apply when extenuating circumstances are part of the picture.
Why the word completion matters
The guideline does not say four years after you listed the home, and it does not say four years after you fell behind. It says four years after completion of the short sale or pre-foreclosure sale. That means the date your sale actually completed is the date that matters.
If you count from the wrong date, your timeline can be off, and that can mean planning your next purchase around a date that is too early or too late.
The two answers Daniel needs
When I think through a situation like Daniel's, I break it into two separate questions:
1. Which date starts the four-year clock?
2. Is there anything in the file that could qualify as extenuating circumstances?
The first question is about the calendar. The second is about whether the shorter two-year path may be available. Keeping them separate prevents the common mistake of blending them into one vague answer.
What Daniel says and what he brings
Here is the question I'd want Daniel to ask any lender:
"Under Selling Guide B3-5.2-03, which date are you counting my four years from, and is there anything in my file that could qualify as extenuating circumstances?"
Then he requests the final settlement statement from the short sale closing. That document is what he uses to confirm the completion date, so he is not relying on memory or on what someone told him.
You can do the same thing today. Ask the question, get the document, and write down the date.
A note on your own file
This is general education about one guideline, not a decision on any specific file. Every borrower's situation is different, and a lender will look at your full picture. What this rule gives you is a clear starting point, so the conversation begins with the right date and the right question.
Next step
If you've been through a short sale and want to know where you stand, call me at 843-LOW-RATE or send me a message. I'll help you work out the date, look at your file, and find the path back to a conventional loan.
Jason Sharon, Licensed Mortgage Broker, Home Loans Inc. NMLS #1281448. Company NMLS #1728740. Equal Housing Opportunity.
Learn more about this loan program: If You Sold Your Home in a Short Sale, Here Is When You Can Get a Conventional Mortgage Again
