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Wondering when you can purchase a house after a short sale? Read on to find out the factors affecting the waiting period and steps to take in order to achieve your homeownership dreams.

Buying a house is a significant milestone for many individuals and families. However, life circumstances may sometimes lead to a short sale, leaving potential buyers wondering about the waiting period before they can purchase a new home. In this article, we will explore the factors that influence the timeframe after a short sale when you can buy a house and provide valuable insights to help you navigate the process successfully.

Factors Affecting the Waiting Period

  1. Credit Score Recovery

After a short sale, your credit score is likely to be impacted. The extent of the impact depends on various factors, including your previous credit history and the specific terms of the short sale agreement. Generally, a short sale can lower your credit score by 85-160 points. To qualify for a new mortgage, lenders typically require a minimum credit score of 620-640. Therefore, it is crucial to work on improving your credit score before applying for a new loan.

  1. Waiting Period Guidelines

Lenders follow specific waiting period guidelines before

Hey there, fellow blogger! So, you've successfully navigated the world of short sales and now have your sights set on your dream house. Congratulations! We're here to fill you in on how soon you can embark on this thrilling adventure once again. Let's dive in!

After a short sale, the timeline for purchasing a new home can vary depending on a few factors. Typically, lenders require a waiting period before they'll consider giving you another mortgage. But fear not, this period isn't as long and arduous as you might think!

In most cases, if you had a short sale, you'll need to wait a minimum of two years before buying another house. However, there are some situations where you might be able to jump back into the housing market even sooner. Keep in mind that these guidelines are subject to change, so always consult with a mortgage expert to get the most up-to-date information for your specific situation.

Alright, let's take a closer look at some scenarios:

  1. Your Credit Score is Rockin' and Rollin':

    If you managed to maintain a stellar credit score throughout the short sale process, you might be eligible for a shorter waiting period.

What happens after a short sale?

The lender first has to agree to a short sale for it to be a viable option. Once the house is sold, the proceeds are used to pay off as much of the seller's outstanding loan balance as possible. In some cases, any remaining debt (known as the “deficiency”) is then forgiven by the lender.

How long does a short sale affect your credit?

Short sales, like foreclosures, can remain on your credit report for as long as seven years. The silver lining with short sales is that your score is likely to begin improving more quickly, usually in about two years. But there are things you can do to speed the process.

What are the rules for FHA loan after short sale?

Yes, you can get another FHA loan after you sell your house, even if it was through a Short Sale. FHA requires that at least three years have passed from the date of the short sale before getting a new mortgage. Under certain extenuating circumstances, it is possible to buy in less than three years.

How do I get a short sale off my credit report?

You cannot remove a short sale from your credit report unless the information listed is incorrect. If the entry is an error, you can file a dispute with the three major credit bureaus to have it removed, but the information will remain on your report for seven years if it is accurate.

How long does it take to recover from a short sale?

As with other major derogatory events, it can take a long time for your credit scores to recover from a short sale. It may be several years before your score fully recovers if you previously had a good credit score. Or, you may have to wait the full seven years if you had an excellent score.

What is the downside of a short sale on a home?

For a short sale to close, everyone who is owed money must agree to take less, or possibly no money at all. That makes short sales complex transactions that move slowly and often fall through. If you're a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure.

Frequently Asked Questions

How fast is a short sale process?

How long does a short sale take? A short sale can take as little as a few weeks or as long as several months. Because short sales are complicated transactions, they tend to be more time-consuming. Plus, the original lender needs to review the short sale offer to determine whether they will accept it.

How much do you pay the IRS when you sell a house?

If you sell a house or property in one year or less after owning it, the short-term capital gains is taxed as ordinary income, which could be as high as 37 percent. Long-term capital gains for properties you owned for over a year are taxed at 0 percent, 15 percent or 20 percent depending on your income tax bracket.

What happens when you convert a rental property to a primary residence?

Once you live in the property as your primary residence, you lose some of the tax deductions you could take when it was an investment. This includes the depreciation deduction, repair costs, travel costs, and any other deductions you could take when the home was a 'business' and not a place for you to live.


How to avoid capital gains tax when selling investment property?

A few options to legally avoid paying capital gains tax on investment property include buying your property with a retirement account, converting the property from an investment property to a primary residence, utilizing tax harvesting, and using Section 1031 of the IRS code for deferring taxes.

How to avoid paying capital gains tax on sale of rental property?
How To Avoid Capital Gains Taxes On The Sale Of Rental Property
  1. You own the home for at least 2 of the preceding 5 years before selling it.
  2. You use the home as your primary residence for at least 2 of the previous 5 years.
  3. You have no excluded capital gains tax from any other sale within the last 2 years.

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