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Mark Cappel
UpdatedNov 30, 2009

I had pre-approval to buy a home in a short-sale, and the lender backed out at the last minute. What can I do?

We are trying to buy a home that is a short sale. Our offer on this home has been approved already but the financing that we thought was in place was not. We are now looking to see what can be done to get a mortgage. We are having a little difficulty because my pay stubs indicate that I receive bonuses as my income. I work on commission. I am a repossesor and receive a set amount per car. My income should cover the cost of my home and debt but I have been told I am required to show 2 yrs of income. This home is only $52k and I surely afford it, I am paying double what the mortgage would be for rent right now.

The lender may have backed away from approving your mortgage because of your uneven income, or it could have been a blemish on your credit history, or your debt-to-income ratio.

I recommend you download a Uniform Residential Loan Application (Form 1003), complete it, and resume your mortgage shopping. Start with the mortgage saving center for no-cost, pre-screened quotes from mortgage lenders.

For an FHA loan the applicant needs to show steady employment, a low debt-to-income ratio, a credit score of at least 580, and two years passage of time from a bankruptcy or foreclosure. To learn more about FHA loans, see FHA Mortgage Types and New Mortgage Regulations — What You Need to Know.

There is no requirement that you get an FHA loan. To learn more about your mortgage options, see Mortgage Basics to Know Before You Apply for a Loan.

Credit Report

Go to to get a no-cost, no-obligation copy of your credit report from each of the three major consumer credit reporting companies (commonly called "credit bureaus"). Review your report and dispute any inaccurate listings.

To find out more how your credit score is calculated I recommend you read an article I wrote explaining FICO Score Calculation. This should give you a much clearer understanding of how credit scores work.

Debt-to-Income Ratio

Lenders calculate and analyze your debt-to-income ratio to determine the size mortgage you can afford. See DTI: Debt-to-Income Ratio Information to learn how to calculate your debt-to-income ratio.

I hope this information helps you Find. Learn & Save.