Posted May 31 2013, 1:56 PM PDT by Martin Goldberg

Ask the Short Sale Expert: Advice on Buying an FHA Short Sale

Posted in Buying by Martin Goldberg

Q:  I am interested in buying an FHA short sale. I’ve heard they can be tough. Do you have any advice?  Travis in Renton, WA

A: My advice can be summed up in two words: Buyer beware.  In a non-FHA short sale, the  lender’s approval process can be quite lengthy. With an FHA loan, the federal government is the investor, and the wheels of government move very slowly. It’s not unusual to wait 9 to 12 months for a decision on an FHA short sale offer. It’s a rare buyer that has that level of patience and flexibility. There are also a number of stipulations that the FHA imposes on short sale purchases:

  • The home must be owner-occupied.
  • The buyer’s closing cost credit cannot exceed 1% of the purchase price.
  • The second lien holder is only allowed to receive $1500. As a result, if there is a second lien the chances that the deal will close are very slim.

All that said, if you love the house and are willing to accept all the criteria – and the property only has one mortgage -  go ahead and proceed.  Just be ready to be patient.

Download PDF of Complete FHA Short Sale Program Guidelines


Martin Goldberg is a Windermere broker in Bellevue, WA and co-founder of Washington Property Solutions, a short sales negotiating company. Since 2003 he has helped more than 900 homeowners sell their homes. A Bellevue native,   Martin graduated with honors from the University of Washington Law School and is a Certified Distressed Property Expert. He loves to travel and has visited 49 of the 50 states. You can learn more about Martin here or at