Over the last several years, Fannie Mae, Freddie Mac and FHA have become more open to the idea of once again providing financing for folks who have been willing to cooperate in a short sale.
Fannie and Freddie have both indicated that, depending upon down payment and the circumstances surrounding the reason for the short sale, they will consider providing financing again in as little as two years:
Here is the Waiting Period For Financing After A Short Sale - straight from the Fannie Seller's Guide:
Freddie Mac also indicates that they will lend two years after a short sale with extenuating circumstances.
Most folks believe that FHA requires a three year waiting period however, their guidelines have long allowed a former short seller to finance again in two years on an exception basis.
And now, with their "Back to Work" program, their guidelines will allow financing in only one year if the reason for default was the result of a significant loss of household income (20% for a period of 6 months or more) that was beyond the borrower's control and the borrower can demonstrate complete recovery.
With all of these programs, be prepared to document, document, document! You would also be wise to choose your lender and Loan Originator carefully. Unfortunately, far too few loan originators really understand how to put a fully documented package together to present to the underwriter.
The bottom line is you may not be as far away from home ownership as you thought you were.
For more information on these programs and, if you'd like, suggestions for knowledgeable loan originators, you can contact me at 603-490-5344.