Breaking news; FHA announced one year waiting period after bankruptcy and foreclosure
FHA has announced that the waiting period for those who have filed bankruptcy has been trimmed from the current two year waiting period to one year. For those who have had a foreclosure, short sale, deed in lieu of foreclosure, there was a 3 year mandatory waiting period but has now changed to a one year waiting period. This one year waiting period will help hundreds of thousands of potential home buyers but they will need to meet certain new FHA guidelines to qualify. Not everyone will be able to qualify.
Criteria to qualify for home mortgage after one year waiting period after bankruptcy and/or foreclosure: Back to Work Program
Currently, there is a two year mandatory waiting period after the discharge of a bankruptcy in order for a home buyer to qualify for a home mortgage loan. There is a three year mandatory waiting period after the recoreded date of a foreclosure, deed in lieu of foreclosure to qualify for a mortgage loan. FHA will offer a one year waiting period after a deed in lieu of foreclosure, bankruptcy, short sale, and/or loan modification if the mortgage borrower falls within a certain credit criteria. It is called the Back to Work Program and to qualify, mortgage loan borrowers need to be able to prove that their household gross income has fallen by at least 20% or more for at least a period of six months or more and was tied to unemployment and/or another disasterous or hardship event which was beyond their control. The mortgage loan borrower must show that they have had at least a one hour certified, approved hour of housing counseling which can be done over the phone or online. The mortgage loan borrower needs to prove that they have had paid their rental payments timely for the past twelve months, which is called rental verification. Cash payment for rent cannot be used as rental verification and a paid receipt cannot be used as rental verification. The only way they can show solid proof for rental verification is by providing the lender copies of cancelled checks unless they are renting their home from a licensed property management company. Letters from a licensed property management company can be used as a source for rental verification.
FHA Back to Work Program makes home ownership possible after a one year waiting period after a bankruptcy and/or foreclosure
FHA does recognize that financial hardship do happen to the very best of us as well as financially responsible individuals. The financial collapse and meltdown of 2008 has caused financial ruins to millions of Americans and have skyrocketted bankruptcies and foreclosures to historical levels. FHA also recognizes that people’s credit histories may not totally reflect the borrowers true ability or propensity for them to repay a mortgage.
FHA Loans Are The Best For First Time Home Buyers And Buyers With Bad Credit
FHA insured mortgage loans are an excellent way for first time home buyers and for home buyers with less than perfect credit or high debt to income ratio become homeowners at affordable mortgage rates. It makes homeownership possible for home buyers with lower credit scores and prior credit issues who cannot qualify for mortgage loans backed by Fannie Mae or Freddic Mac possible. There are steep fees associated with FHA loans such as a 1.75% upfront mortgage insurance premium as well as an annual mortgage insurance premium of 1.35%.
Related> FHA Back To Work Mortgage