Advice on FHA loan with a non-reaffirmed mortgage

[x23]

After lurking on here reading, learning and seeing a lot of good advice given, it is my turn to ask for some. So here is our story. We filed for chapter 7 back in 2011 and discharged 11/2011. We didn't re-affirm our mortgages, 1st ($180k owed at 6.25%) or 2nd ($31K owed at 11.75%) both with Citi. Total payments = $1725 (includes taxes). We are 50K underwater, but continue to pay to stay. We have come to a point where we're feeling like all we're doing is renting and wasting money. We're a family of 5 in a townhome and need to get into a larger home Our credit since has improved, wife has a 650 credit score and I have a 695. We both have credit cards and a car loan under our names. So my questions are:

Is it possible to get a FHA loan even though we are still living in this property?

If we find renters for our property will FHA take that into consideration?

If not, do you suggest stop paying on this property and save the money? The only reason I don't like this option is the waiting of 3 years before getting another mortgage.

Any and all advice is welcomed and appreciated.

Thanks is advance,
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[justbroke]

It is going to be tough with FHA unless you could qualify for another loan while keeping the first mortgaged property. Even then, FHA approved lenders will probably have their own requirements as well (which is allowed). Remember, the FHA guidelines are just "baseline" guidelines; lenders are allowed to apply additional seasoning and other requirements.

[x23]

Thanks justbroke! If we do a short sale, do we still have to wait 3 years to do a FHA loan?

[justbroke]

Thanks justbroke! If we do a short sale, do we still have to wait 3 years to do a FHA loan?

The current FHA guidelines read as though "extenuating" circumstances, including bankruptcy, could relax the seasoning requirement. A deed-in-lieu, short sale, and surrender-in-bankruptcy are all treated as a foreclosure. The downside is that the latter, bankruptcy, doesn't even start the clock until the property is sold or otherwise transferred!

The best thing to do is that when you're ready, shop the loan. Use more than one bank or find a really good broker.