Did you lose your home to a foreclosure, deed in lieu of foreclosure or bankruptcy? Was the loss of your home due a job loss or reduction in your income? Are you now back to work and want to purchase a new home, but fear you may not qualify for a home loan?

The Federal Housing Administration (FHA) wants to give qualified individuals a second chance at owning a home – even if their credit histories were negatively impacted by recession-related economic hardships. With the “FHA Back to Work – Extenuating Circumstances” program, qualified borrowers can obtain a mortgage loan if they have re-established a responsible credit history and can document the extenuating circumstances behind their job loss or income reduction.

Minimum eligibility requirements of the FHA Back to Work program

To qualify for the FHA Back to Work program, you must meet several eligibility requirements:

• You must meet general FHA requirements regarding employment, income and credit.
• You must have experienced an “economic event” that was beyond your control, resulting in the loss of employment and/or income. Your household income must have been reduced by 20% or more for at least 6 months. Because of this loss of income, you weren’t able to make your monthly mortgage payments on your previous home, resulting in a pre-foreclosure sale, short sale, deed-in-lieu foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification or forbearance agreement.
• You must provide records that show your loss of income (20% or more) coincided with this economic event.
• You must document that your mortgage or credit problems are the result of this financial hardship.
• You must demonstrate that you have fully recovered from this economic event by having a satisfactory credit history for at least 12 months. To prove this, you must show you have made on-time rental housing payments with no delinquencies, and you have a satisfactory payment history for all other monthly payments. If you have any open collections or judgment accounts, a capacity analysis will be performed to determine if you can repay your creditors while making your new mortgage payments.
• You must complete HUD-approved housing counseling a minimum of 30 days but no more than 6 months prior to submitting a loan application with an approved lender. This counseling will help you understand loan options and obligations, assist with the creation of a household budget and better prepare you for future financial distress.

Get Back on Track and in a Home

The FHA Back to Work program enables first-time or repeat home buyers to apply for a home loan in as little as 12 months following the loss of your home. You don’t have to wait the standard 3 years after a foreclosure, short sale or deed-in-lieu or the traditional 2 years after a bankruptcy before you can qualify for a loan.

If you’re interested in applying for an FHA Back to Work – Extenuating Circumstances mortgage loan, contact the mortgage specialists at Grandview Lending in Indianapolis at 866.690.4920. We can answer your questions, assess your situation and walk you through the process. At Grandview Lending, we want to help you get back on track and into your dream home.

Photo credit: iStockphoto