There has been some talk about a new FHA guideline that allows short sellers to re-purchase a home providing they were never late on the payments from the loan they sold short.

Lets take a look at the actual text from the FHA guidelines:

1. Borrowers are NOT eligible for new FHA financing if they pursued a short sale to take advantage of the declining market in order to acquire a similar or better property near their current residence.

2. Borrowers ARE eligible for new FHA financing if they had zero late payments on the mortgage in the last 12 months AND the proceeds from the short sale serve as payment in full.

3. Borrowers whose mortgage was in pre-foreclosure status at the time of short sale are NOT eligible for FHA financing for 3 years unless they qualify for an exception (see 4155.1, 4.C.2.1)

4. On an FHA refinance, borrowers ARE eligible if the current lender chooses to write down the mortgage due to declining values or reduction in income.

The problem is that you can’t just meet guideline #2. You must meet guideline #1 as well.

One lender told me this week that a move of at least 50 miles from your current home might qualify. It also depends on the employment situation and the credit scores…etc. In my opinion… the only way to get a new FHA loan prior to a 3-year wait is to re-locate to a new state!