FHA Loans

August 27, 2018

FHA Loans in Greater Chicago – Mortgage After a Short Sale

Mike Dulla


A short sale is the sale of real estate where the net proceeds of the sale will fall short of the total mortgage debt owed on the home. If all mortgage lien holders agree to accept less that what is owed on the home, a short sale can be completed.

Just a few years back, short sales were almost the norm in the Chicago market, rather than the exception. The percentage of lender-mediated sales, or short sales, peaked in February of 2012 and reached 55% – more than half of all homes sold that month were distressed home sales.

With short sales affecting so many people in the greater Chicago market, it is important to know FHA guidelines pertaining to borrowers and new home buyers who have had a short sale in the past.

Wait Period

Typically, a lender must document that three years has passed from the date of the short sale. The three-year waiting period begins on the date of the transfer of title for the property sold.


Some exceptions to this wait period may be considered. Lenders may approve an exception if the borrower was current on all twelve mortgage payments prior to the short sale and others may consider an exception for an extenuating circumstance such as a serious illness or death of a wage earner.

Every home buying situation is unique. If you have questions or need additional help, contact us using the form below or at 708-531-8388. United Home Loans will be happy to guide you through the application and approval process.

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