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FHA loan questions 1-17

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FHA back to work program

Man holding a back to work signThe FHA has not renewed the Back to Work program and is currently unavailable. Call your Congressman and Senator to reinstate the FHA Back to Work program.

The FHA Back to Work Program enables a home buyer to purchase a home just 12 months after a foreclosure, short sale or a deed in lieu of foreclosure. The FHA program was announced in 2013 and was extended through Sept. 30, 2016. The Back to Work Program gives homebuyers a second chance at homeownership. To qualify for the program, mortgage borrowers must meet the standard FHA loan requirements, document prior financial hardship, re-establish an on time credit history, and complete a HUD approved homeowner counseling program.
Limitations to the program may include previous loan modifications, adjustable-rate loan recasting, inability to rent a previous income property, and divorce

On August 15, 2013, the Federal Housing Administration (FHA) loosed its guidelines for borrowers who "experienced periods of financial difficulty due to extenuating circumstances".

The following financial difficulties may be program-eligible under the program:
  • Chapter 7 bankruptcy
  • Chapter 13 bankruptcy
  • Deed-in-lieu
  • Forbearance agreements
  • Foreclosure
  • Loan modification
  • Short sales
  • Pre-foreclosure sales

The Back to Work loan program waives the agency's three-year waiting time period following a foreclosure, deed-in-lieu, or short sale and waives the FHA two-year waiting period after a Chapter 13 bankruptcy or Chapter 7.

Homebuyer/applicants must meet several minimum eligibility standards. The first requirement is that you must have experienced an "economic event" (i.e. short sale, pre-foreclosure sale, deed-in-lieu, foreclosure, Chapter 13 bankruptcy, Chapter 7 bankruptcy, loan modification, forbearance agreement).

You must show a 20% income loss or more for a minimum of six consecutive months prior to the event to be eligible for the Back to Work program. Supporting documentation requires pay stubs with lower year-to-date earnings when your earnings dropped. Unemployment compensation receipts, W-2s and/or tax returns satisfy the FHA requirement. Applicants must demonstrate a complete recovery from the economic event and you have re-established your income

You must have had a good credit history prior to the economic event and that the bad credit occurred after the start of the economic event; and, that you have re-established a perfect payment record for 12-months on major accounts and other obligations. Limited late payments on revolving accounts may be permitted.

Frequently Asked Questions About The Back to Work Program

Q. Can first-time home buyers use the program?
A. Yes, first-time buyers are eligible.

Q. Can you be denied a FHA loan?
A. Loan denial can occur for any number of reasons, such as an excess debt ratio, inadequate employment, etc.

Q. Can you get a FHA loan twice?
A. Yes. A second FHA home loan is possible if the applicant meets the second home guidelines. But in most cases, the first FHA loan will need to be paid off.

Q. Can repeat home buyer use the program?
A. Yes

Q. Do sellers have to pay closing costs on FHA loans?
A. Home sellers are not required to pay the buyer's closing costs. However, if agreed to in the sales contract, the seller can pay up to 6% of the sales price.

Q. What is the minimum credit score for the FHA Back to Work program?
A. There is no minimum credit score requirement for the FHA Back to Work program, although FHA lenders may establish a minimum credit score for approval.