A short sale usually appears on your credit report as a mortgage settled for less than you owed, and like most negative items it can be reported for seven years. How long you wait to buy again depends on the next loan: as of 2026, Fannie Mae waits four years (two with extenuating circumstances), Freddie Mac 48 months on manually underwritten loans, and FHA three years unless you made every payment on time for the 12 months before the sale. Payments missed before closing are reported separately, so the months before the sale matter as much as the sale itself.
At a glance
| How a short sale is reported | Settled account, up to seven years (Experian; CFPB, 2026) |
|---|---|
| FHA wait to buy again | Three years, or none if current for the 12 months before the sale (HUD Handbook 4000.1) |
| Fannie Mae wait | Four years, two with extenuating circumstances (Selling Guide B3-5.3-07, current October 2026) |
| Freddie Mac wait | 48 months, 24 with extenuating circumstances (Guide 5202.1, manual underwriting) |
| Herriman typical home value | $601,499 (Zillow, August 2026) |
How does a short sale show up on your credit report?
In a short sale the lender accepts less than the loan balance and releases its lien, so the account closes without being paid in full. (For how and why lenders agree to that, see what a short sale is and who approves it.) The credit report records that outcome, and it records any late payments that came before it.
The settled mortgage
Experian says a short sale typically shows on your credit report as a settled account for seven years. The exact wording varies by servicer, so the line may not say "short sale" at all. The CFPB says a credit reporting company can generally report most negative information for seven years, and bankruptcies for up to ten.
Late payments before the sale
Many sellers fall behind before a short sale closes, and each late payment is negative information in its own right. That history is often what a future lender looks at most closely. FHA's own short sale rules expect it: a Standard FHA Pre-Foreclosure Sale requires the loan to be at least 61 days behind, and FHA servicers must tell borrowers in writing that the sale is reported to the credit bureaus and will likely affect future mortgage and credit eligibility.
A second mortgage or home equity line
A second lender can agree to release its lien without forgiving the balance. If that happens, the debt can stay open and keep reporting after the house is sold. Freddie Mac, for example, pays second-lien holders from sale proceeds only if they extinguish the debt and waive any deficiency claim in writing. Ask for the same wording from any second lender before you sign.
How much does a short sale hurt your credit score?
No one can tell you in advance how many points you will lose. The drop depends on where your score started, how many payments you missed and what else is on the report. Be wary of anyone who quotes a number or promises a score after the sale.
The best-known research is older. In 2011, FICO reported that it found no significant difference in score impact between a short sale, deed in lieu or settlement and a foreclosure, that the effect depends heavily on the starting score, and that a full recovery could take 7 to 10 years. That research assumed missed payments before the event. Experian says a short sale with no missed payments is less harmful than a foreclosure, which is one reason sellers who can keep paying while they sell often do.
| Outcome | How it is reported (Experian) | Fannie Mae wait for a new loan |
|---|---|---|
| Short sale | Settled account, seven years | Four years (two with extenuating circumstances) |
| Deed in lieu | Mortgage labeled settled | Four years (two with extenuating circumstances) |
| Foreclosure | Seven years from the first missed payment that led to it | Seven years (three with extenuating circumstances) |
The biggest practical gap is the wait to buy again, not the report itself. The full side-by-side is on short sale vs foreclosure in Utah, and handing the deed back is covered in deed in lieu compared with a short sale.
How long after a short sale can you buy a house?
Each loan program sets its own waiting period, and lenders can add stricter rules of their own (called overlays). The clock usually runs from the date the short sale closed, not from your first missed payment. These are the published figures as of October 2026.
| New loan | Standard wait after a short sale | Shorter wait possible | Source |
|---|---|---|---|
| FHA | Three years | None if current for the 12 months before the sale; extenuating circumstances | HUD Handbook 4000.1 |
| VA | No set period in VA guidance; lenders may set one | Confirm with the lender | VA 2023 lender training slides |
| Fannie Mae | Four years | Two years with extenuating circumstances | Selling Guide B3-5.3-07 |
| Freddie Mac | 48 months (manual underwriting) | 24 months with extenuating circumstances | Guide 5202.1 |
FHA loans
HUD's Handbook 4000.1 says a borrower is generally not eligible for a new FHA-insured mortgage if they gave up a property through a short sale within three years of the new loan's case number assignment, counting from the date title transferred. There is an important exception: if every mortgage payment on the old loan was made within the month due for the 12 months before the short sale, and installment debts were paid on time for the same period, the three-year rule does not apply. A separate exception covers documented events beyond your control, such as serious illness or the death of a wage earner, together with reestablished good credit. HUD says divorce and being unable to sell after a job relocation do not count. Under FHA's automated TOTAL Scorecard, a short sale within three years sends the file to manual underwriting. This text comes from the Handbook issued May 20, 2024, so ask a lender to confirm against the current version. The seller side of an FHA sale is on how FHA short sales work.
VA loans
The VA figures available are from VA's 2023 lender conference slides on credit underwriting, not from the lender handbook itself. Those slides list no waiting period after a short sale or deed in lieu, but say late mortgage payments should be included in the credit review. Treat that as lender practice to confirm, not a rule: individual VA lenders can set their own wait. Your remaining VA entitlement is a separate question, because a loss on the old VA loan can reduce your benefit until it is repaid. Details are on VA short sales and your entitlement.
Fannie Mae conventional loans
Fannie Mae's Selling Guide (section B3-5.3-07) sets four years after a preforeclosure sale, which is its term for a short sale, measured from the completion date. With documented extenuating circumstances the wait is two years. The same four and two years apply to a deed in lieu. After a foreclosure the wait is seven years, or three with extenuating circumstances and limits on the loan.
Freddie Mac conventional loans
Freddie Mac's Seller/Servicer Guide (section 5202.1) sets a 48-month recovery period after a short sale for manually underwritten loans, or 24 months from completion with extenuating circumstances. For seven years after a short sale, a new Freddie Mac loan is limited to a primary-residence purchase at a maximum loan-to-value of the lesser of 90% or the program maximum, or a no-cash-out refinance. Freddie's automated system, Loan Product Advisor, may treat a prior short sale differently, so ask the lender which path your file takes.
USDA, jumbo and portfolio loans
USDA rural loans have their own rule, which this site has not verified, so no figure is given here. Jumbo and portfolio lenders set their own credit standards. Ask the lender for its waiting period in writing before you count on a date.
What counts as extenuating circumstances
Each program defines this term itself, and none of them accepts every hardship. FHA names serious illness and the death of a wage earner as examples and excludes divorce. Keep the records that show what happened and when: medical bills, a death certificate, layoff notices, pay stubs. The same documents usually support the hardship explanation you give the old lender, covered on writing a short sale hardship letter.
Example: a Herriman short sale and the wait to buy again
Example only, not a real sale. Take a Herriman home worth the city's typical value of $601,499 (Zillow's typical home value, August 2026) with a loan balance of $640,000. The owner cannot cover the gap of about $38,500 plus selling costs, the lender approves a short sale, and it closes in October 2026.
- Seller A kept paying on time for the 12 months before closing. FHA's exception for borrowers current at the time of the short sale may apply, so an FHA purchase could be possible without the three-year wait. Fannie Mae would still apply its four-year wait (October 2030), or two years (October 2028) with documented extenuating circumstances.
- Seller B missed four payments before closing. The late payments appear on the report alongside the settled mortgage. FHA's standard three-year rule would run to about October 2029, Freddie Mac's 48-month manual-underwriting period to October 2030, and a VA lender would review the late payments in its credit decision.
The difference between the two sellers is the payment history before closing, not the short sale. If you are weighing whether you can keep paying during the sale, compare that with your other choices on your options for selling a Herriman home when money is tight.
Utah rules that affect what follows you after a short sale
A credit report is not the only thing that can follow a short sale. In Utah, what matters next is whether any part of the old debt survives the closing.
Deficiency after a short sale. Under Utah Code 78B-2-313, a lender's lawsuit to recover the shortfall after a short sale of a single-family home securing a personal or household loan is barred unless it is filed within three months after the release of mortgage or reconveyance of trust deed is recorded. The bar does not apply if the owner committed fraud in the short sale, or if the borrower signed an agreement with the lender to pay some or all of the deficiency. Read the approval letter for that kind of agreement before you sign, and note the date the reconveyance is recorded with the Salt Lake County Recorder.
Deficiency after a foreclosure. After a Utah trustee sale, Utah Code 57-1-32 gives the lender three months to sue for the balance, and a court cannot award more than the debt, interest and costs minus the property's fair market value on the sale date. The full trustee-sale timeline is on the Utah foreclosure process and deadlines.
Tax on the forgiven balance. Forgiven mortgage debt can be taxable income even when your credit report shows the account as settled. Utah's income tax starts from federal adjusted gross income and is a flat 4.45% for 2026 (Utah Code 59-10-104), so the federal answer usually carries into your Utah return. See short sale taxes and the 1099-C.
How to rebuild credit after a short sale
Rebuilding starts before closing. Keeping the mortgage and other accounts current while the lender reviews the sale protects the history that later lenders read first. The steps in that review are on the short sale timeline and lender package.
Check your reports after closing
Pull your free reports at AnnualCreditReport.com a month or two after closing. Confirm that the first mortgage shows a zero balance and is reported as settled, that any second mortgage or home equity line is closed with no balance if the lender forgave it, and that no payments are shown late after the date the sale closed. Raise any error with the servicer and the credit bureau, and keep the approval letter and closing statement as proof.
Keep every other account current
Car loans, cards and student loans keep reporting each month. A clean record after the sale is what the extenuating-circumstance and recovery rules above look for, and FHA's exception specifically checks installment payments as well as the mortgage.
Plan the next purchase around the right date
Write down the date the short sale closed and the date title transferred. Those dates, not the date you first fell behind, start most waiting periods. Short sale credit effects are one of several costs to weigh, set out with the benefits on short sale pros and cons.
Before you plan around any date on this page, ask a mortgage lender to review your credit report and your short sale closing documents against the current guide for the loan you want. Waiting periods and lender overlays change, and no one can promise a credit score or a loan approval.
Frequently asked questions
How many years after a short sale can you buy a house?
It depends on the new loan. As of 2026, Fannie Mae waits four years (two with extenuating circumstances), Freddie Mac 48 months on manually underwritten loans (24 with extenuating circumstances), and FHA three years, with no wait if you paid on time for the 12 months before the sale. VA lender guidance lists no fixed period, but individual lenders can set one. Ask a lender to confirm.
How many years does a short sale stay on your credit report?
Experian says a short sale typically shows as a settled account for seven years, and the CFPB says most negative information can generally be reported for seven years. Late payments before the sale are reported separately and follow the same general seven-year rule. Bankruptcies can stay for up to ten years.
Is a short sale better for your credit than a foreclosure?
Often, but not always. Experian says a short sale with no missed payments is less harmful than a foreclosure. FICO's 2011 research, which assumed missed payments, found no significant score difference. The clearer gap is the wait to buy again: Fannie Mae waits four years after a short sale and seven after a foreclosure.
Can you get an FHA loan right after a short sale?
Possibly. HUD's three-year FHA wait after a short sale does not apply if every mortgage payment was made within the month due for the 12 months before the short sale and installment debts were also paid on time. A short sale within three years still sends the file to manual underwriting, so ask an FHA lender to review your history.
What are the credit disadvantages of a short sale?
The mortgage is reported as settled for up to seven years, any late payments before the sale also appear, and FHA, Fannie Mae and Freddie Mac loans can require a wait of up to four years. A second lien that is released but not forgiven can keep reporting. Other costs and benefits are covered on the pros and cons page.
Who loses money in a short sale?
The lender or the investor that owns the loan absorbs the shortfall between the payoff and the sale proceeds, and second-lien holders may accept a capped payment. Fannie Mae and Freddie Mac cap total payments to second-lien holders at $6,000. The seller usually receives no sale proceeds, may owe tax on forgiven debt and carries the credit effects.
Does a short sale show up as a foreclosure on a credit report?
No. Experian says a short sale is typically reported as a settled account, while a foreclosure is reported as a foreclosure for seven years from the first missed payment that led to it. The exact wording varies by servicer, so check your reports after closing and ask for corrections if the account is described wrongly.
Sources
- CFPB: How long does negative information remain on my credit report?
- Experian: Short Sale vs. Foreclosure: What's the Difference? (June 22, 2025)
- FICO: Research Looks at How Mortgage Delinquencies Affect Scores (March 24, 2011)
- HUD: Handbook 4000.1, FHA Single Family Housing Policy Handbook (issued May 20, 2024)
- HUD: Mortgagee Letter 2025-12 (effective October 1, 2025)
- VA: Loan Guaranty Conference 2023, Credit Underwriting (slides)
- VA.gov: VA help to avoid foreclosure
- Fannie Mae Selling Guide: B3-5.3-07, Significant Derogatory Credit Events - Waiting Periods
- Fannie Mae Servicing Guide: D2-3.3-01, Fannie Mae Short Sale
- Freddie Mac Seller/Servicer Guide: Section 5202.1, Credit reputation
- Freddie Mac Seller/Servicer Guide: Section 9208.2
- Utah Legislature: Utah Code 78B-2-313, Action to recover deficiency after short sale
- Utah Legislature: Utah Code 57-1-32
- Utah Legislature: Utah Code 59-10-104 (effective January 1, 2026)
- Utah Legislature: Utah Code 59-10-103
- Zillow Research: Home Value Index, Herriman city (August 2026)