Will you be approved for a short sale?
In order to approve your short sale and sell your home for less than you owe on the mortgage, your lender will require that you have a qualifying hardship. This usually involves some type of financial hardship resulting in a current or imminent inability to continue paying the mortgage payments, and ultimately a foreclosure. Lenders approve short sales because they cost them less than having to foreclose on the property.
If your mortgage lender determines that you can and will pay your mortgage payments now and going forward, your short sale request will be denied. The bank's only compelling reason to approve your short sale is their financial gain. So what does the bank determine to be a qualifying hardship?
The most common financial hardships that are easily approved and widely accepted by lenders:
- Missed mortgage payments.
- Unemployment.
- Employment or military relocation.
- Divorce from a contributing household member.
- Death of a co-borrower/household wage earner.
- Actively in pre-foreclosure.
- Increase in expenses including; property taxes, insurance, mortgage payment adjustments, household expenses.
- Decrease in income.
- Natural disaster impacting property or employment.
- Medical issues.
However, there are other, less common situations that can also be approved, if presented properly:
- Excessive forbearance obligations.
- HUD Partial claims leading to excessive mortgage debts.
- Future financial obligations that will lead to imminent default.
- Purchased a new home and unable to pay for old.
- Bad tenant situations that result in financial losses.
- Properties needing significant repairs out of reach for borrowers income.
- Voluntary career changes.
- Voluntary relocation.
There are a lot of life circumstances that are not "standard" reasons to have to short sell, but may in fact be approved by your lender when presented properly. There is a lot of misinformation out there on the web regarding what is and is not an acceptable hardship. Before assuming your “hardship” doesn’t qualify, talk to me!
Last Updated on August 2, 2025 by Minna Reid