Would I be able to get an FHA loan after getting a conventional?

Question

Hey team, my mom is a few steps in the process of purchasing her second two unit property listed at (I'm helping). The seller accepted an offer of 73,000. The mortgage broker just informed me he found a short sale record on her credit report from December 2014 (long story but the short of it is she cosigned my sister's home which she defaulted on and ended up buying as a short sale). In order to qualify for a conventional loan the short sale closing record needs to be 4 years or greater.

She won't be able to take out the loan and I'll be next up to qualify for the loan.

If I go through with this loan, she would be paying the 20% down and mortgage payments. I don't have any worries about her being responsible.

BUT! I want to know, would I ruin my chances as a first time home buyer (unable to get an FHA loan on the next property I'd like to buy) by putting my name on this conventional loan? Any drawbacks or repercussions?

I have until the next day to get back to the mortgage broker so any advice is greatly appreciated!

Chris Mason · Answer

Hi @Nestaly Nin,

Ask for a copy of the AUS findings for Freddie Mac, which will be called LP. Don't assume you can't go conventional until you see that.

Fannie Mae's AUS is called DU.

LP, for good credit scenarios, often has no waiting period following a short sale (barring, as always, overlays). It's transaction, credit report, and scenario, dependent.

No way to guess if LP will say "yes" or "no" without the credit report and scenario being run through LP, much to the dismay of the "I WANT ALL THE ANSWERS GUARANTEED IN BLOOD BUT NO YOU CAN'T PULL MY CREDIT!" people.

Obviously this will not work if you are using a "Fannie Mae Only" lender.

Nestaly Nin · Answer

Thank you for the quick follow-up, Sean!

If I take out the loan wouldn't I need to be on the title? I figured I could just keep it in her name so that I'm not associated with owning a home (not sure if that makes sense).

I believe the conventional lender wouldn't have had a problem if it wasn't for the short sale on her credit report from a few years ago.

Let me know if this helps clarify.