We provide a comprehensive overview of the mortgage waiting periods following negative credit events such as a short sale on FREEandCLEAR that you should review. The mortgage waiting period following a short sale is typically four years for a conventional mortgage, three years for an FHA mortgage and two years for a VA mortgage. The waiting periods are shorter if you experienced an extenuating circumstance such as a job loss or medical illness that contributed to the short sale. The mortgage waiting period following a short sale if you experienced an extenuating circumstance is typically two years for a conventional mortgage and one year or no waiting period for an FHA mortgage or VA mortgage, depending on your circumstances. You should check with lenders to understand their policies on this point to determine if the extenuating circumstance classification applies to you.
Based on the information you provided and your focus on a low down payment, the FHA mortgage program may be applicable to you. The FHA mortgage program enables borrowers to buy a home with a down payment as low as 3.5% of the property purchase price. The FHA program does require borrowers to pay an up-front and ongoing mortgage insurance premium (MIP) but you will likely be required to pay mortgage insurance (PMI) or a higher interest rate with most low or no down payment programs. You can use our FHA Mortgage Qualification Calculator to determine what size FHA mortgage you can afford as well as the cost of the FHA mortgage insurance. The FHA mortgage program is offered through participating lenders and you can contact lenders your area by clicking INTEREST RATES
There are other low / no down payment mortgage programs that may be applicable to you and we provide a comparison table of these programs that includes key attributes such as borrower eligibility. Please note that many of these programs have income limits that you likely exceed and some programs are only available to first-time home buyers (even if you have previously owned a home you may still qualify as a first-time home buyer if you have not owned your primary residence within the past two years).
Our recommendation is that you contact multiple lenders to determine if the extenuating circumstance designation applies to your short sale. If it does, you may be able to qualify for an FHA mortgage today. If it is determined that your short sale did not involve an extenuating circumstance then we recommend that you wait until November (three years from your short sale) before you apply for a mortgage. In the meantime, save for your down payment and continue to pay down your debt as lowering your monthly debt expense will improve your debt-to-income ratio and help you qualify for a mortgage.
Finally, you asked about private mortgage lenders, which I assume you mean hard money, non-traditional lenders. Hard money lenders charge significantly higher interest rates and fees and require a 30%+ down payment so we recommend avoiding these lenders if possible. Given your situation there is no real benefit to working with a hard money lender unless you are absolutely unwilling to wait until November to get a mortgage. Even then, a hard money loan you obtain today will likely be far more expensive than an FHA or conventional mortgage you obtain in November so waiting is probably your best call.