Does The FHA Back To Work Program Work?

This Article On Does The FHA Back To Work Program Work Was Written By Nicholas Ferrante Of The Gustan Cho Team at CrossCountry Mortgage

Everyone experiences hardship. Some people lose jobs, some have serious health is sues while others find financial difficulty in caring for an aging loved one. Regardless of your situation you should know that there is always hope. Through September 2016, the Federal Housing Administration’s Back to Work- Extenuating Circumstances mortgage loan program shortens the waiting period to buy a home to as little as one year after you’ve had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. There are rules and guidelines that apply in order to be qualified. Here is what you need to know:

Do You Qualify For The FHA Back To Work Program?

All FHA Back To Work Programs are manual underwrites and all manual underwriting guidelines apply such as requirements of verification of rent and the FHA underwriter has a lot of discretion on manual underwrites. Underwriters are trained to look at compensating factors which are positive factors the borrower has such as reserves, job longevity, longevity with credit tradelines, and other income that is not used to qualify income such as a spouse that works who is not on the loan or the borrower having additional income like a second job but not used to qualify income.

FHA Will Consider Your Eligibility If You Had Extenuating Circumstances

1. You Meet FHA Loan Requirements

  • For those interested in applying for an FHA loan, applicants are now required to have a minimum FICO score of 580 to qualify for the low down payment advantage , which is currently at around 3.5 percent.
  • If your credit score is below 580, however, you aren’t necessarily excluded from FHA loan eligibility as long as you get an approve/eligible per DU FINDINGS but any borrower with under a 580 FICO credit score needs a 10% down payment.
  • Conventional mortgage loan borrowers who have high debt to income ratios can turn to FHA loans to qualify if they do not meet conventional debt to income guidelines.
  • Maximum debt to income ratios for conventional loans is capped at 45% DTI. FHA is much more generous with debt to income ratios. FHA caps their back end debt to income ratios at 56.9% for borrowers with at least a 620 FICO credit scores.
  • FHA loans have a front end debt to income ratio cap of 46.9% DTI for borrowers with at least a 620 FICO credit scores. Under 620 FICO credit score FHA borrowers are capped at a 43% DTI.
  • FHA loans is a phenomenal mortgage loan program for first time home buyers, home buyers with bad credit and low credit scores, self employed buyers, and home buyers who have high debt to income ratios.
  • Gift funds are allowed and can be up to 100% used for the down payment and/or closing costs. Seller’s concessions up to 6% are allowed for the seller to contribute towards the buyer’s closing costs but sellers concessions cannot be used for down payment.

2. You can document the mortgage or credit problems resulted from a financial hardship.

  • You will need to explain how the financial hardship was something beyond your control that reduced your income or caused you to lose employment.
  • If your household income dropped by 20% or more for at least six months, it may count for this type of financial hardship.
  • Documents needed can range from W2s or paystubs that show a loss of income to medical bills.

3. You have re-established a responsible credit history

  • To re-establish credit you must have a 12 month record of on time rental housing property with no delinquencies and not have been 30 days late on more than one non-housing loan payment.
  • If you still have any open collection or judgment accounts, then a “capacity analysis” will be done to see if you can repay those creditors.
  • You can qualify for a FHA Loan with prior bad credit, unpaid collection accounts, charge offs, and even judgments.
  • FHA does not require you to pay off your old collection accounts in order for you to get a FHA loan approval and close on your mortgage loan.
  • There are many mortgage lenders that have mortgage lender overlays which are an additional set of guidelines above and beyond the FHA minimum mortgage lending guidelines and most do require that unpaid collections be paid off prior to closing.
  • Here at we have little to no lender overlays.
  • If FHA does not require collections to be paid off, no collection accounts need to be paid off.

How to Get Started And Does The FHA Back To Work Program Work?

  • To start an application with a FHA-lender you 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 your debt, ability to afford the mortgage, features of the mortgage, explain mortgage insurance and the loan application process.
  • You will need to complete your counseling at least 30 days before you apply for a new FHA mortgage.
  • Your certificate is valid for 6 months.
  • Each application under Back To Work is handled on a case-by-case basis, so it’s best to discuss your individual circumstances with a lender to determine if this program is right for you.
  • Many borrowers have heard of horror stories about the FHA Back to Work Program and question whether Does The FHA Back To Work Program Work?

Nicholas Ferrante of The Gustan Cho Team at CrossCountry Mortgage offers the FHA BACK TO WORK MORTGAGE PROGRAM.  This article was written for informational purposes only for my viewers and the answer to the title to this blog ” Does The FHA BACK TO WORK PROGRAM WORK?” is YES, however, the turn down rate is extremely high. I suggest those who want to go through the FHA BACK TO WORK PROGRAM is to get a TBD UNDERWRITE and after you get a conditional mortgage loan approval, then enter into a real estate purchase contract.

About The Author: Nicholas Ferrante Of The Gustan Cho Team At CrossCountry Mortgage

Nicholas Ferrante is the author of “Does The FHA Back To Work Program Work?” and a writer for Gustan Cho Associates Mortgage Resource Center . Nick Ferrante is also a consumer direct manager and expert loan officer with The Gustan Cho Team at CrossCountry Mortgage and helps borrowers with prior credit issues and/or have higher debt to income ratios where they cannot qualify at banks or other lenders who have lender overlays. Nick Ferrante of The Gustan Cho Team Rapid Response Group teams up with Michael Gracz and both are available to answer any questions you may have on qualifying for FHA Loans, VA Loans, USDA Loans, or Conventional Loans. CrossCountry Mortgage has a national reputation of not having overlays and closing loans in 21 days or less. Contact us by emailing your case scenarios at

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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