New FHA guidelines have been announced to prevent short-seller sellers from buying replacement properties with an FHA mortgage.
These new FHA loan requirements apply in cases where “a previously owned property was sold for less than what was owed (short sale)” or “there is principal write down of indebtedness that cannot be refinanced into a new mortgage (short pay off).”
HUD states “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.”
Is it possible to get FHA financing is you have had a short sale? Yes, after three years.
Exceptions - HUD says that “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.”
Again, this is a case by case basis, so if you would like to see if you are eligible, please contact me.
Khai McBride
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*This is not an offer to lend. 
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