A short sale starts with permission.
If your sale proceeds would not repay all debt and approved selling costs, a lender may agree to a short sale. Every affected lienholder must agree to the transaction. An offer from a buyer does not replace those approvals.
First compare the available paths: a conventional sale if the numbers work, keeping the home, a feasible rental, or a lender-approved exit. Discuss loan and assistance options directly with your servicer. Renting has costs and risks and may be affected by your loan, insurance, or association rules.
Still making your payments? Tell the servicer what has changed and why you need to move. Do not intentionally miss payments based on this guide. Loan programs have different requirements; request individual guidance from your servicer and qualified advisers.
See why the closing gap matters.
A loan balance alone does not show what you would need to close. Include updated payoff amounts for all liens and an estimate of the transaction costs. The starting figures below are an illustration, not a property valuation.
Your estimated sale numbers
Editable examplePlease check your entries. Values must be whole dollars within the displayed limits.
Your estimates show a shortfall. A property review can help clarify whether a short sale or another approach is worth discussing.
Calculated as sale price minus debt payoffs and selling costs. This is not the amount a lender will forgive, a tax calculation, or an approval. Fees and commissions are negotiable. These inputs stay in this browser and are not submitted with your contact request.
Get the important terms in writing.
- Remaining debt. Ask whether each creditor fully releases your personal liability. An approval to release a property lien may leave debt behind.
- Cash or a new note. Understand any requested contribution or continuing payment obligation before you accept.
- Other liens. Include second mortgages, HELOCs, taxes, association liens, and any other recorded interests in the review.
- Deadlines and costs. Confirm the approved price, permitted expenses, closing deadline, and any relocation funds.
Texas homeowners should not rely on California’s anti-deficiency statutes. A Texas attorney should review your documents, any legal protections, and the specific releases. Texas law can allow deficiency claims after foreclosure; that is distinct from negotiating the terms of a voluntary short sale. Texas State Law Library.
Your loan program changes the questions.
The company receiving your payments may service a loan owned, insured, or guaranteed by another organization. Ask your servicer to identify the program and provide its current requirements.
| Loan type | Ask your servicer | Before you rely on it |
|---|---|---|
| Fannie Mae / Freddie Mac | Can my documented hardship qualify? What financial package and contribution review are required? | Confirm the actual investor. Current-payment cases may involve additional requirements. |
| FHA | Which current HUD loss-mitigation or pre-foreclosure sale rules apply to my loan? | Do not stop paying to meet a rule described online. Get case-specific guidance first. |
| VA | Is a compromise sale available? How could a claim affect future VA loan entitlement? | Ask VA and your lender about remaining entitlement and future financing; do not assume automatic restoration. |
| Other / not sure | Who owns or insures the loan, and which short-sale policy applies? | Do not apply another program’s contribution or assistance rules to your loan. |
Fannie Mae’s guide includes evaluation of current borrowers, contribution requirements, and specific conditions for relocation assistance and deficiency waivers. Those provisions are not universal benefits. Read the Fannie Mae guide. For VA options, start with VA’s homeowner assistance page.
Plan for taxes and your next home.
Canceled debt is not automatically tax-free.
IRS Publication 4681 says the principal-residence exclusion generally ends for new discharges or agreements after December 31, 2025. An earlier qualifying written agreement may change the result. For a 2026 transaction, have a CPA or enrolled agent check current law and your facts.
The insolvency exclusion compares liabilities with the fair market value of all assets immediately before debt cancellation—including retirement assets. Steady income does not decide this test, and an underwater home alone does not establish eligibility. Form 982 and tax-attribute adjustments may apply. A Form 1099-C deserves professional review. IRS guidance.
There is no universal “buy again” date.
A short sale can affect credit. Fannie Mae generally requires four years after a short sale, with a possible two-year exception for documented extenuating circumstances. Those periods alone do not establish eligibility. FHA, VA, other programs, and individual lenders have their own requirements. Ask a mortgage professional to evaluate your next purchase. Fannie Mae waiting-period guidance.
Bring these questions to the conversation.
- What is a realistic sale-price range, and what could the seller net sheet show?
- Who owns or insures each loan, and what hardship documentation is needed?
- Will any creditor request cash or a new promissory note?
- Will each approval release my personal liability for the unpaid debt?
- Could canceled debt create taxable income, and which exclusions might apply?
- What is the expected approval process, and what could delay closing?
- Is relocation assistance available and approved in writing?
- How might this affect credit, renting, and a future mortgage?
Keep your mortgage statements, notices, and payoff information for a secure discussion with the appropriate professionals. Do not upload or email account numbers, bank statements, tax returns, or Social Security numbers through the initial contact form.
Already have a sale notice? Contact your servicer and a Texas attorney promptly. A listing, application, or conversation does not itself postpone foreclosure. Do not wait for a response to this website.
Go directly to the source.
Program rules can change. These official resources support the educational content above; individual eligibility requires a separate review.
- CFPB: What is a short sale?
- CFPB: Find a HUD-approved housing counselor
- Texas State Law Library: After the foreclosure sale
- IRS Publication 4681: Canceled debts and exclusions
- Fannie Mae: Short-sale servicing requirements
- Fannie Mae: Waiting periods after significant credit events
- VA: Help to avoid foreclosure