How To Qualify For FHA Loans Bad Credit Georgia

This BLOG On How To Qualify For FHA Loans Bad Credit Georgia With A Lender With No Overlays Was UPDATED On November 27th, 2017

Georgia is a Southern State that is border by Florida and one of the fastest growing states in the country.

  • The state is to the east of the Atlantic Ocean
  • It is East of South Carolina and is West by the state of Alabama
  • Georgia borders the north by the state of Tennessee and the state of North Carolina
  • It is one of the fastest growing states when it comes to people migrating and home buyers
  • Housing Prices have been increasing throughout the whole state of Georgia with no signs of a correction
  • There is more demand of housing in the state of Georgia than there is inventory
  • Many Home Builders set up shop in Georgia and mortgage lenders with no lender overlays are in demand

The Gustan Cho Team at USA Mortgage are licensed in the State of Georgia and have no lender overlays on government and conventional loans in Georgia.

Housing Demand In Georgia Versus Meeting Waiting Period After Bankruptcy And Foreclosure

We have written many blogs about getting a home loan with bad credit.

  • FHA Loans is the most popular loan program in the nation
  • HUD, the parent of FHA, sets up FHA Guidelines
  • FHA is not a lender but a government agency that insures and guarantees FHA Loans that is originated and funded by banks and private mortgage companies
  • One of the most important guidelines that HUD has is the mandatory waiting period requirement after Chapter 7 Bankruptcy and Foreclosure
  • Georgia home prices have been appreciating over 10% every year the past few years and there does not seem to be any slowdown
  • HUD realized this and has created and implemented the FHA Back To Work Mortgage Program
  • This Loan Program shortened the waiting period to a one year for home buyers with a prior
    • Chapter 7 Bankruptcy
    • Foreclosure
    • Deed In Lieu Of Foreclosure
    • Short Sale
  • This program was launched in August 2013 and did not last long
  • The FHA Back To Work Mortgage Program turned out to be a disaster and did more damage than good
  • Countless of home buyers who qualified literally went through Hell with the Back To Work Loan Program
  • Mortgage Companies were afraid to touch it
  • Many that did and issued loan commitments ended up retracting the loan approvals and not closing the loan
  • The FHA Back To Work no longer exists but I would like to cover what the program entailed on this BLOG

The Now Extinct FHA Back To Work Mortgage Loan Program

Although the Back To Work Program no longer exists, we will cover it briefly on what the program entailed.

  • There is alternative to the Back To Work Mortgage that The Gustan Cho Team at USA Mortgage launched this year called Non-QM Loans where there is no waiting period after Foreclosure, Deed In Lieu Of Foreclosure, and Short Sale
  • There is a one year waiting period after Chapter 7 Bankruptcy discharged date
  • 10% to 20% down payment is required depending on borrower’s credit scores
  • Mortgage Rates are higher than traditional FHA Loans

Here is a little about the FHA Back To Work Program:

  • HUD’s FHA Back to Work mortgage program is a special program that enabled a borrower get a FHA Loan after Chapter 7 Bankruptcy and/or housing event
  • FHA Back to Work mortgage loan program shortened the waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale to one year waiting period
  • Traditional waiting periods are 2 years after a bankruptcy discharge, three years from the recorded date or sheriff’s sale date of foreclosure or deed in lieu of foreclosure, or three years after the date of the HUD’s settlement date of the short sale
  • However, HUD’s FHA Back to Work Extenuating Circumstances due to an economic event has strict mortgage underwriting guidelines since it is a manual underwrite.  It is a great program for those who need a home loan with bad credit, especially first time home buyers
  • First time home buyers who had a prior bankruptcy and have their credit re-established can got an opportunity to participate in HUD’s  FHA Back to Work mortgage program after one year of their discharge date of their bankruptcy

Unfortunately, this loan program turned out to be a major flop and has been discontinued.

General Qualification Requirements For FHA Loans Bad Credit Georgia

Georgia home buyers seeking FHA Loans Bad Credit Georgia can now qualify with The Gustan Cho Team at USA Mortgage.

  • Georgia first time home buyers or homeowners with prior bankruptcy can qualify for FHA Loans Bad Credit Georgia
  • There are other loan programs other than the now defunct Back to Work mortgage program that The Gustan Cho Team at USA Mortgage has launched this year

We will briefly discuss how to qualify How To Qualify For FHA Loans Bad Credit Georgia after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, and periods of bad credit:

  • With the Back To Work Program, mortgage loan borrower needs to have been unemployed or underemployed six months prior to filing bankruptcy, or the initiation of the foreclosure, deed in lieu of foreclosure, or short sale
  • Household needed a 20% reduction of their household income
  • Proof needs to be provided via W-2s and tax returns
  • A Back to Work Mortgage loan applicant cannot have resigned or voluntarily quit their jobs
  • They need to have been terminated, laid off, or the business had to be gone out of business
  • A voluntary termination will automatically disqualify the mortgage loan applicant from qualifying for FHA Back to Work Extenuating Circumstances due to an economic event
  • For example, if an employee quit their job because a member of  family member was ill and you had the 20% reduction of their household income, this will not qualify home buyers for the Back to Work Extenuating Circumstances due to an economic event mortgage program
  • Reason being is because they voluntarily left their job
  • Even though the reason they left their job was due to medical illness of a family member
  • Reduction of income due to a divorce will also not be a qualifier for the Back to Work mortgage program even though half the income is reduced due the other spouse leaving

Georgia Home Buyers Can Qualify For FHA Loan After Bankruptcy And Foreclosure

The Gustan Cho Team at USA Mortgage is a direct lender with no overlays on FHA Loans.

Here are the FHA Guidelines On Qualifying For 3.5% down payment home purchase FHA Mortgage:

  • 2 Year Waiting Period After Chapter 7 Bankruptcy
  • Georgia Home Buyers can qualify for FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval
  • There is no waiting period requirements after Chapter 13 Bankruptcy discharge date
  • Three year waiting period after recorded date of foreclosure or deed in lieu of foreclosure
  • Three year waiting period after short sale date to qualify for FHA Loans
  • 580 minimum credit score to qualify for 3.5% down payment FHA Loans
  • Outstanding Collections And Charge Off Accounts do not have to be paid off
  • Maximum Debt To Income Ratio To Qualify For FHA Loans is 46.9% front end and 56.9% back end for approve/eligible per AUS Findings with 620 credit scores: 43% DTI with under 620 credit scores

How Mortgage Underwriters Analyze Borrower Credit

Georgia home buyers can qualify for FHA Loans Bad Credit Georgia without needing to pay off outstanding collections and charge off accounts. Just meeting the minimum credit score requirements and the income does not automatically qualify a person for a FHA Loan. The overall borrower’s credit history will be reviewed, especially for borrowers with a Chapter 7 Bankruptcy and/or Housing Event.

  • However, the mortgage loan borrower’s credit history will be scrutinized and analyzed
  • The credit history background check is one of the biggest reasons why mortgage loans get denials

Even though mortgage borrowers meet all of FHA lending guidelines, the credit history needs to be the following:

  1. Credit payment history will be reviewed:  Borrowers must have had good credit an a timely payment history prior to the loss of employment or underemployment on cases of bad credit due to loss of job and/or business
  2.  Credit will drop because of bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  3. Maybe credit scores will plummet 100 plus points
  4. After bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale, borrowers cannot have any late payments and need re-established credit where the credit report will reflect an increase of credit scores
  5. Even if borrowers get no new credit or re-established credit, credit scores will increase as bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale, borrowers credit will slowly improve as it ages over time

Timely Payment History Up To Date Of Economic Event

Georgia Home Buyers who need to qualify for FHA Loans after bad credit with a direct lender with no overlays, please contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays. USA Mortgage, founded by CEO Doug Shukar and COO Linda Pring in 2001 is one of the largest lenders in the state of Georgia.

By Gustan Cho

www.gustancho.com

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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