For many people who have had to short sell their home for whatever reason, one of the most common questions is “how long before I can get a mortgage again?”

HUD has recently announced with an official Mortgagee Letter (09-52) that depending on whether or not you were current at the time of the short sale will make a difference as to how long you must wait to get a new FHA insured loan.

If you are not current at the time of the short sale of your home:

Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances.

If you are current at the time of the short sale of your home:

Although it is not clear in the letter (surprise, surprise), it is common that lenders will not allow you to get an FHA loan for 2 years from the time of short sale of your home.

But –

According to the Mortgagee Letter, it unclearly states that you are eligible for another FHA loan if you were current on your payments at the time of sale and “you didn’t short sale your house to take advantage of market conditions and purchase at a reduced price a similar or superior property within a reasonable commuting distance…”

Confusing if you ask me.

But here is the official wording of it:

FHA guidance on short sales
Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to:

► Take advantage of declining market conditions, and
► Purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.

For detailed information on converting existing principal residences into rental properties, see 4155.1 4.E.4.g.

Guidance on borrowers current at the time of short sale
Borrowers are considered eligible for a new FHA-insured mortgage if:

► They were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and

►The proceeds from the short sale serve as payment in full.

For detailed information, see “Short Sales” at 4155.1 4.C.2.l.

And if you have tried unsuccessfully to short sell your home and haven’t been able to get a loan modification, be sure you are aware of how long the waiting period is to get an FHA loan after a foreclosure.

And as always, if you have additional questions you can always call 1-800-CALL-FHA to speak with a representative at FHA directly.