You Decide Realty · Short Sale & Foreclosure Help Center
We are going to start with the uncomfortable part, because you deserve the real answer rather than the one that sells listings.
Then we are going to show you the thing that is genuinely, verifiably different — and it is worth years of your life.
“A short sale protects your credit score. A foreclosure destroys it.”
“There’s no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure.” FICO adds that it “could take up to 7-10 years to fully recover, assuming all other obligations are paid as agreed,” and — counterintuitively — that the higher your score was to begin with, the longer recovery takes.
We are deliberately not publishing a specific point-drop number. FICO’s charts showing the impact by starting score are published as images and we could not verify the underlying figures from the source. The “85 to 160 points” ranges you will see quoted everywhere are third-hand. We would rather tell you less and be right.
How soon a lender will give you another mortgage. That is not a credit-score question, it is an underwriting-guideline question, and the guidelines are published, specific, and enormously different between a short sale and a foreclosure. On conventional financing it is four years versus seven. On FHA and USDA it can be zero if you were never late — and VA publishes no seasoning rule for a compromise sale at all.
The CFPB’s general rule: a credit reporting company can report most negative information for seven years. Bankruptcies run up to ten.
The important nuance is seven years from what. Under the Fair Credit Reporting Act, the clock for a delinquent account charged to profit and loss or placed for collection runs from 180 days after the commencement of the delinquency that immediately preceded that action — roughly, the date you first fell behind. 15 U.S.C. § 1681c
If you fell behind first, the clock started before the sale ever closed. The item ages off sooner than seven years from your closing date — sometimes considerably sooner.
If you were never late, there may be no delinquency date to start a seven-year clock at all. That is one of several reasons a homeowner who acts early ends up in a materially different position than one who waits.
On how the tradeline itself is coded: a short sale generally surfaces as a mortgage account settled or paid for less than the full balance, and a foreclosure as a foreclosure. We are not going to publish specific industry reporting codes, because the authoritative guide is a paid industry publication we could not verify against. What matters practically is the underwriting treatment below.
Measured from the completion, discharge, or dismissal date through loan disbursement, for manually underwritten loans. Automated underwriting can produce different results — Freddie Mac, for instance, does not require a waiting-period review at all when Loan Product Advisor returns an “Accept.” Always confirm with a lender before relying on these.
| Program | Short sale / preforeclosure sale | Deed-in-lieu | Foreclosure |
|---|---|---|---|
| Fannie Mae | 4 years (2 with extenuating circumstances) | 4 years (2 with extenuating circumstances) | 7 years (3 with extenuating circumstances, max 90% LTV, principal residence purchase only) |
| Freddie Mac | Generally mirrors Fannie at 4 years | Generally 4 years | Generally 7 years |
| FHA | 3 years — or none if all payments were made within the month due for the 12 months preceding the sale | 3 years | 3 years |
| VA | No published VA seasoning rule. 38 CFR 36.4340(g) addresses only foreclosure. In practice most lenders apply a 2-year overlay unless you were current at the time of sale. Entitlement may also be reduced. | Same — no published VA rule; lender overlays govern | Generally 2 years. VA’s own text is “one to two years,” and within 12 months a lender generally cannot find satisfactory credit. 38 CFR 36.4340(g)(2), (g)(4)(i) |
| USDA | 3 years — or none with no late payments in the prior 12 months and no exploitation of a market decline | 3 years | 3 years |
FHA and USDA can waive the waiting period entirely if you had no late payments in the twelve months before the sale — and VA publishes no seasoning rule for a compromise sale at all. A homeowner who sees it coming and sells while still current can move out of one house and into another with no waiting period at all. A homeowner who waits until the notices start cannot. This has nothing to do with your credit score and everything to do with timing.
The honest caveat: Fannie Mae offers no such carve-out. Its four-year period applies regardless of payment history. So “act before you are late” is powerful advice for government-loan borrowers and considerably weaker for conventional ones. Which loan you have should change your strategy, and it is one of the first things we check.
Fannie Mae defines these as “nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.” Meeting the definition cuts the waiting period roughly in half, and it requires documentation — not a story.
FHA’s version is narrower: serious illness or the death of a wage earner. Divorce and job relocation generally do not qualify for FHA. Keep your medical records, death certificates, termination letters, and disability determinations. They are worth years.
This is the one veterans get wrong most often, and lenders conflate it constantly. VA publishes no credit underwriting seasoning rule for a compromise sale or deed-in-lieu, so how long you wait is generally set by your lender’s overlay rather than by VA. Separately, VA’s own language is that a short sale or deed-in-lieu “could result in a loss or reduction in your future home loan benefit,” and after a foreclosure a veteran must repay VA’s loss to restore entitlement.
Can I qualify? and how much entitlement do I have left? A veteran can be credit-eligible immediately and still be entitlement-constrained on the size of the next loan. Ask your lender both questions explicitly, and get the answer to the second in writing from VA. Our Veterans Hub →
Questions we get every week
We are not going to publish a number, and we would be careful with anyone who does. FICO's research found no significant difference in score impact between a short sale, deed-in-lieu, settlement and a foreclosure, and said full recovery can take seven to ten years. The specific point-drop figures FICO published by starting score are in chart images that we could not verify from the source, and the ranges widely quoted online are third-hand. What is verifiable and far more useful is the waiting period to get a mortgage again.
Three years from the date of the short sale — or potentially no waiting period at all if all mortgage payments on the prior loan were made within the month due for the twelve-month period preceding the short sale. Exceptions also exist for circumstances beyond your control, but FHA's definition is narrow: serious illness or death of a wage earner. Divorce and job relocation generally do not qualify. Confirm current guidelines with an FHA lender.
Usually yes, and often quickly, but there are two separate questions. For credit underwriting, VA generally imposes no waiting period after a compromise sale or deed-in-lieu. For entitlement, VA states that a short sale or deed in lieu 'could result in a loss or reduction in your future home loan benefit,' and after a foreclosure a veteran must repay VA's loss to restore the benefit. Ask your lender both questions and get the entitlement answer in writing from VA.
Generally the reporting period is seven years, but the clock starts earlier than most people assume. Under the Fair Credit Reporting Act it runs from 180 days after the commencement of the delinquency that preceded the charge-off or collection — roughly the date you first fell behind, not the date the sale closed. If you fell behind well before closing, the item ages off sooner than seven years from closing. If you were never late, there may be no delinquency date to start the clock at all.
On conventional financing the difference is in when you can buy at all — four years after a short sale or deed-in-lieu versus seven after a foreclosure — rather than in the pricing itself, which is driven by your score and profile at the time you apply. Note one specific structural difference: Fannie Mae's three-year foreclosure exception for extenuating circumstances comes with restrictions the short sale exception does not, including a maximum 90% loan-to-value and a limit to principal residence purchases.
Once a Nevada trustee’s sale is held, title vests in the purchaser with no right of redemption — there is no undo. But until then, an owner-occupant’s right to reinstate generally runs to five days before the sale, and a pending offer is a reason to ask for a postponement.
702-843-0044Ken Calder · Nevada Broker B.1001776 · Speak to a licensed broker, not a call center.
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No judgment, no sales pitch, and no pressure to list anything. If the right answer is a loan modification, a bankruptcy attorney, or a HUD counselor instead of us, that is what we will say. We are a licensed Nevada brokerage, not a foreclosure rescue company — and we never charge a homeowner a fee to look at their situation.
We do not publish a figure, a deadline, or a statute we have not read. Every claim above traces to one of these. If you find something here that is out of date, tell us and we will fix it and re-stamp the page.