FHA has a three year wait period for borrowers who were in default at the time of the short sale (or pre-foreclosure sale). If the borrower was not behind on mortgage payments and installment debts at the time of the short sale and for 12 months preceding the short sale, there may be no waiting period. (The latter is very difficult to accomplish)
FHA tends to be a popular option as the minimum down payment is currently 3.5% and FHA is more forgiving with credit than Fannie or Freddie.
Fannie Mae has various wait periods depending on loan to value:
- 2 years with a minimum 20% down payment
- 4 years with a down payment of at least 10%
- 7 years with standard down payment guidelines (varies depending on credit scores)
Freddie Mac has a 4 year waiting period.
Fannie Mae and Freddie Mac may consider “extenuating circumstances” which would allow a buyer to be considered eligible at 2 years.
VA currently does not offer guidance. Most underwriters may treat it as a foreclosure, which has a 2 year waiting period. Like FHA, if the borrower was on time with mortgage payments and other debts at the time of the sale and for 12 months proceeding, there may be no wait period.
USDA has a 3 year wait period.