NON-QM Loans Versus Back To Work Mortgage Loan Program

This BLOG On NON-QM Loans Versus Back to Work Mortgage Loan Program  Was UPDATED On November 26th, 2017

All government and conventional loan programs have waiting period requirements after the following:

  • Chapter 7 Bankruptcy
  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale

However, many hard working Americans who have filed bankruptcy and/or had a housing event recover much soon than the standard mandatory waiting period after bankruptcy and foreclosure.

  • HUD, the parent of FHA, launched a pilot FHA Loan Program called BACK TO WORK MORTGAGE where it reduced the traditional waiting period to one year
  • This program turned out to be a flop and HUD eventually canceled the ill fated FHA Back To Work Mortgage Period
  • This BLOG is a rewrite from a one of our articles that we wrote about the FHA Back To Work when it first was launched in 2013

FHA Back To Work Was Launched In 2013

Christmas came early this year for home buyers who have had previous bankruptcy, foreclosure, short sale, and deed in lieu of foreclosure back in August 2013. Countless of home buyers were waiting for this FHA Back To Work mortgage program which shortened the waiting period after bankruptcy and housing event to a one year waiting period. Unfortunately, the Back To Work Mortgage turned out to be a major five star DISASTER.

  • Millions of Americans have lost their jobs and homes due to the Great Recession of 2008
  • Many were forced into bankruptcy
  • Many lost their homes through foreclosure
  • The entire mortgage industry underwent through a major overhaul
  • Many mortgage loan products like no doc loans, stated income loans, and teaser rate loans completely evaporated from the industry
  • Thousands of sub prime mortgage lenders literally closed their homes and millions of loan originators were forced out of business due to strict new licensing guidelines as well as the loss of sub prime business
  • Those mortgage loan originators who weathered the storm had to adapt to a complete new system
  • They had to learn the new mortgage guidelines and get new licensing done such as taking national and state examinations and go through criminal and financial background checks

Current Waiting Period After Bankruptcy And Foreclosure To Qualify For Home Loan

The current waiting period for home buyers differs depending on the mortgage loan program:

  • For both VA and FHA Loans, the waiting period is 2 years from the discharge date of a Chapter 7 Bankruptcy 
  • Fannie Mae and Freddie Mac require a four year waiting period after Chapter 7 Bankruptcy discharged date to qualify for conventional loans
  • To qualify for FHA Loans, the current waiting period requirements for home buyers who had a prior foreclosure, short sale, or deed in foreclosure is three years from the date the foreclosure or deed in lieu was recorded on the county records
  • With VA Loans, it is two years
  • Three years is a long time
  • FHA announced the Back to Work mortgage loan program on August 2013
  • This program shortened the waiting period to one year from the Chapter 7 bankruptcy discharge date and one year from the recorded date after a foreclosure or deed in lieu of foreclosure or short sale
  • Everyone thought this program would open up doors to many home buyers who have recovered from a bankruptcy and/or foreclosure and enable them to purchase a home after a one year waiting period
  • Everyone that qualified applied to get turned down
  • There are certain requirements that apply for the Back to Work Mortgage Loan Program but most mortgage lenders were scared to touch it

Minimum Qualification For NON-QM Loans Versus Back to Work Mortgage Loan Program

There were strict qualification requirements on Back To Work FHA Loans. Not everyone will qualify for the new FHA Back to Work Mortgage Loan Program.

  • The first and foremost important criteria is that FHA requires a good explanation on the extenuating circumstances on the reason the borrower had to file bankruptcy and/or have a foreclosure, deed in lieu, or short sale
  • The reason they are looking for is that the borrower was not employed or had income reduction of at least 20% and that was the cause of filing bankruptcy or having a foreclosure
  • After filing bankruptcy and/or having a foreclosure, FHA wants to see that the mortgage loan borrower has re-established their credit and have not had a late payment in the prior 12 months
  • The mortgage loan borrower needs rental verification and the only way rental verification can be proven is by providing cancelled checks which is payable to the landlord for the previous 12 months
  • If the mortgage loan borrower is renting their unit from a property management company, a letter from the property management company will be sufficient

Again, even if borrowers qualified for this mortgage loan program, most lenders did not want to touch it.

NON-QM Loans Versus Back to Work Mortgage Loan Program Underwriting Requirement

NON-QM Loans Versus Back to Work Mortgage Loan Program : All of Back to Work Mortgage Loan Program loans needed to be manually underwritten.

  • Only mortgage lenders that do manual underwrites will be able to do Back to Work Mortgage Loan Program loans
  • Your best bet is to contact a mortgage broker who has access to wholesale mortgage lenders who do manual underwrites but only a fraction of these mortgage applications got conditional loan approvals and even a fraction of loan approvals closed

Qualify For Home Loan With NON-QM Loans With No Waiting Period After Housing Event

NON-QM Loans Versus Back to Work Mortgage Loan Program is a great option for home buyers who cannot meet the waiting period on FHA Loans. Housing Prices are going up double digits in many parts of the country and  NON-QM Loans Versus Back to Work Mortgage Loan Program is a great short term financing option.

The Gustan Cho Team at USA Mortgage has an alternative financing program for home buyers who do not meet the waiting period requirement after a previous housing event:

  • Foreclosure
  • Short Sale
  • Deed In Lieu Of Foreclosure

NON-QM Loans do not require any waiting period after housing event. However, 10% to 20% down payment is required, Mortgage Interest Rates are higher than standard FHA Loans. However, most home buyers can close their home loans with NON-QM Loans and when they meet the waiting period requirements can refinance into a government and/or conventional loan.

Home Buyers who do not meet the waiting period requirements on government and/or conventional loans can qualify for NON-QM Loans. Contact  Gustan Cho Associates at 262-716-8151 or email us at  We are available 7 days a week, evenings, weekends, and holidays.

Related> 2015 FHA Back To Work Mortgage Guidelines

Related> Do You Qualify For The FHA Back To Work Mortgage?

Related> FHA Back To Work Mortgage

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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