Special Short Sale Guidelines for FHA or VA Loans

If you are currently in default on your mortgage and are financially strapped you may have decided to try and sell your home under a short sale. There is a lot to consider and one of them might be to first figure out if you might qualify. Special consideration are needed for home that were financed via FHA or a VA loan.

Every lender will have different criteria for accepting a short sale proposal. In many cases you won't know what their requirements are up front. In the case of FHA and VA loans we do know what some of those requirements are.

As always consult a professional specializing in short sales when proceeding but here are some of the basic guidelines related to these types of loans and a short sale.

FHA Short Sale Criteria
- Net proceeds from the sale must be equal to or greater than 82% of the property's fair market value (FMV).
- The Ratio of FMV to the total current loan amount is greater than or equal to 63%.
- The second loan (if there is one) receives no more then $1000.
- Repairs cost less than 10% of after repaired value.

VA Short Sale Criteria
- Net proceeds from the sale must be equal to or greater than 88% of the property's fair market value (FMV).

I know, after reading this you are almost as confused as you were before you found this post. Don't worry you don't need a CPA to figure out the general qualifications. If you are working with a seasoned and experienced short sale Realtor they will ask you the right questions to help qualify if you are within the guidelines.

Best of luck and try to find some comfort in knowing this - Banks do not want to have to foreclose on your home. They are in the business of lending money not owning real estate. Don't be afraid or embarrassed to talk to them about your situation. They are more willing now then before to work out ways to help you catch up, maybe even forbearance is an option(where they let you skip a payment or temporarily reduce your payments). You may have options you are not even aware of. So before you even talk with a Realtor make sure to talk to your bank. You may be pleasantly surprised.

Best of luck and if you would like to talk with us to ask some questions about the process, cost, timing, anything at all feel free to call or email us.