The FHA Back-to-Work Program enables people that suffered a loss in income and as a result of some type of negative economic event to own a house again in a short amount of time. What used to be a 2 or 3-period wait is now only 12 months if the circumstances are right. If you can prove to your lenders that you were able to bring your income back up and get your finances back in order, meaning that your payments have been made on time for the last 12 months and your bad credit is behind you, you may be eligible for the program.
Qualifying for the FHA Back-to-Work Program
Qualifying for the FHA Back-to-Work Program is just like qualifying for a standard FHA loan. You have to have a credit score higher than 580 if you want to put just 3.5 percent down on the home or higher than 500 if you can put 10 percent down. Your last 12 months cannot have any late payments and your debt ratio should not be higher than 31 percent on the front-end and 43 percent on the back-end. These qualifications are just guidelines, however, every lender will have their own rules; some will bend the rules for you while others will be stricter in their requirements.
Finding FHA Back-to-Work Program Lenders
The key in getting the FHA Back-to-Work Program is finding lenders willing to participate in the program. It is important to understand that not all lenders participate – even those that are approved to provide FHA loans. Some lenders think the program is too risky and refuse to offer it while others offer it with their own stipulations in place so that they can protect themselves. The good news is that because the FHA guarantees the loans, banks have more lenience in what they allow because if you default on your payments, the bank will still get their money from the FHA.
If your current lender does not offer the program, feel free to shop around. There are many FHA Back to Work Program lenders; you just have to find them. Oftentimes a lender that does not offer them will point you in the right direction since it is not a loan they care to compete with trying to get your business.