Not sure of income requirements, but I know of the Rural Home loan for first time home buyers that finances at 103%. It also has the perk of no PMI insurance.
It is confusing how someone can afford a $500,000 house and have no debt doesn't have down payment.
It was just an example.
But like a majority of americans, home owners have become upside down or breaking even when a sale is forced.
In other words... if you bought a home a few years ago- Put over 100k down. Sell it in 2010 and hope you don't have to bring cash to closing due to depreciation.
This would leave a qualified buyer (credit wise) with no money for next home. A buyer would have to rent or assume they could acquire a home that would be at it's lowest value.
A short sale won't leave a person with good credit. There will be a credit ding and reduction in overall score when a short sale is reported to the repositories, simply because a lender has written off a portion of the debt.
To qualify for some of the higher LTV programs out there, unless it is a private lender, you have to be a first time home buyer, which means you haven't owned a home for the last three years......whether primary, vacation or rental.
Good luck!