A couple of years ago, when interest rates fell as low as 3.5%, a large number of home owners grabbed the opportunity to refinance their homes. It was almost too good an opportunity to miss. It's great for the home owners, but not so good for the mortgage brokers and home loan lenders. Once someone buys or refinances at an incredibly low rate, they no longer need to get another loan for a very long time, if ever. 

Naturally, nobody would want to miss out on a 3.5% interest rate and be stuck with a rate of 5%. This is great news for new borrowers. Since lenders have lost the chances of new business from those who took advantage of the interest rate dive; they are now turning to targeting new prospective borrowers, many of whom have short sales in their past - and even foreclosure in some cases. 

It is important to realize that regardless of your past credit history, your credit needs to be in good standing now, today. You may have had short sales a few years ago, but lenders expect you to have repaired your credit by now. To be considered for an FHA backed home loan your credit score ideally needs to be at least in the 700 bracket. 

The second thing to consider is that the date of your short deal is important to the lender. Although many will only consider borrowers who experienced a short sale more than three years ago, there are a few who will accept borrowers whose short sale was as little as two years previous. 

You need to check this aspect with your home loan credit officer. In order to avoid a last minute stipulation that ends your chances of closing an expensive transaction it is VITAL that the lender is fully acquainted with the complete details of their financial specialist (the party to whom they are offering your credit) guaranteeing rules. In fact, it is wise to keep a duplicate of the HUD-1 from your short sale handy, to submit with your loan application. 

Finally, there are a few lenders who will want to know what motivated the short sale. The most common reason for a short sale is hardship involving a misfortune, for example a death in the family, reported loss of pay, illness, separation or divorce. Naturally, if your particular hardship was using your second line of credit to buy another new car or a yacht, you won't be acquiring a new home loan for a while; certainly not an FHA approved loan program. 

It is best to consult with loan specialist who has experience with FHA loans, and make sure you do not take any chances with failing to give your lender all information. If in doubt, disclose. Rather disclose information they don't need to know than not disclose something because you think they don't need to know it, and then find out later it lost you the loan. 

The good news is that this is a win-win all round. The customer has the ability to buy a home despite having a short sale in their history, which means they can stop wasting money on paying rent; while the bank gains a new customer who in many cases is a more secure borrower after the recession.