Here's some good news. If you have had a tough past there is a Loan Program that can get you in a home. This Program is Backed by FHA. The Loan is Call the Back to Work Program. So if you have in the past: foreclosure, short sale, deed-in-lieu of foreclosure, or has declared bankruptcy you may qualify for a home loan.
FHA Back To Work Program
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About the Program
Under the new FHA program called “Back to Work – Extenuating Circumstances”, if a borrower has had a foreclosure, short sale, deed-in-lieu of foreclosure, or has declared bankruptcy they may qualify for a home loan if they are back to work and can document the extenuating circumstances.
Do They Qualify?
FHA will consider borrowers for eligibility if they had a financial hardship in the past but can now document the following circumstances:
1. They meet FHA loan requirements
2. They can document the mortgage or credit problems resulted from a financial hardship
3. They have re-established a responsible credit history
4. They have completed HUD-approved housing counseling
The borrower will need to explain how the financial hardship was something beyond their control that reduced their income or caused them to lose employment. If their household income dropped by 20% or more for at least six months, it may count for this type of financial hardship.
To re-establish credit they must have a 12 month record of on-time rental housing payments with no delinquencies, and not have been 30 days late on more than one non-housing loan payment. If they still have any open collection or judgment accounts, then a “capacity analysis” will be done to see if they can repay those creditors.
How to Get Started
To start an application the borrower must first take a “Pre-Purchase Counseling” course with a HUD approved housing counseling agency 30 days before you start the application. A certified counselor will assess their debt, ability to afford the mortgage, features of the mortgage, explain mortgage insurance and the loan application process. The counseling certificate is valid for 6 months.
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