The FHA Back To Work Loan program is much like qualifying for the standard FHA home loan programs.
Except that you must take HUD approved housing counseling at least 30 days before you sign a contract and apply for the mortgage.
You’ll need need to have recovered fully from your financial problem – bankruptcy, foreclosure, previous short sale or whatever your “economic event” was. Your credit should back on track with two good accounts and no 30 day late payments in the most recent 12 months. If you have not yet re-established credit secured credit cards are a great way to get started. Keep the balances low so you have un-used available credit.
The underwriter will require you to prove that your major economic event was caused by a loss of income over a six- month period or longer and that you have fully recovered from your loss of income and credit for at least the most recent 12 month period prior to your application being submitted and approved. You will also need to complete and FHA / HUD approved housing counseling program at least 30 days before you make application.
As far as your credit score goes, our FHA lenders are looking for 580 or better with a 3.5% down payment. If your score is lower you’ll need at least 10% down to be considered.
Your debt to income to ratio should be lower than 43%, in other words all of your debt payments listed on the credit report plus the new mortgage, real estate taxes, home insurance and FHA mortgage insurance premium added together should be less than 43% of your gross income. If you are buying a house in Florida complete the online loan application and we can help you sort out the numbers.
Having additional liquid savings left over after your down payment and closing costs, reserves, will greatly improve your chances of getting approved for any FHA loan.
Lender outline of the back to work program
Through HUD’s Back to Work program, borrowers who have been affected by extenuating economic events such as, loss of employment or decrease in income, may be eligible to gain financing when the following requirements are met:
Documentation of Compliance with Housing Counseling Requirements:
- Homebuyer Counseling is required to be completed a minimum of thirty (30) days but no more than six (6) months prior to submitting a loan application to Sun West. For a list of approved counseling agencies, Click here or call 1-800-569-4287.
Additional Documentation Requirements:
- Explanation and Documentation of Economic Event(s)
- Documentation of Loss of Employment, Loss of Income, or a combination of both, which caused household income to reduce twenty percent (20%) or more for a period of at least six (6) months
- Verifications for any and all collections, judgments or other derogatory accounts reported were the result of Economic Event(s)
- Verification of 12-month period elapsed since the applicable date of Economic Event(s) satisfaction such as, foreclosure, bankruptcy, or short sale
- The borrower should have exhibited Satisfactory Credit prior to the Economic Event(s)
- The borrower’s derogatory credit should have occurred after the Economic Event(s)
- The borrower has a re-established Satisfactory Credit for a minimum of twelve (12) months
The Back to Work Program is applicable to all Federal Housing and Administration (FHA) purchases with the exception of the Home Equity Conversion Mortgage (HECM).