As with many government programs, not all of the kinks are ironed out before they are initiated. Recently, there has been a lot of ambiguity in regards to who exactly can qualify under the FHA’s “Back to Work” Program. Through the “Back to Work” Program, you can purchase 12 months after a credit event with evidence of economic hardship. Economic hardship is defined by a household loss of income, 20% or more over a 6 months period or longer.
As more of these FHA “Back to Work” applications are filed, it is becoming clearer exactly which extenuating circumstances qualify and which do not according to underwriting guidelines.
1) A loss of rental income will typically not qualify under the FHA “Back to Work” Program. A loss of rental income is considered an ordinary risk of being a landlord.
2) Those borrowers who are self-employed or commissioned employees do not qualify under the FHA “Back to Work” Program. The underwriting guidelines require that borrower has walked away from their prior home or filed bankruptcy due to an employer driven economic event, such as a lay-off or cut in pay.
3) Medical events do not constitute an “economic hardship” as defined by the FHA “Back to Work” Program guidelines. A loss of job or income must have resulted from an employer driven economic event rather than from explanatory medical circumstances.
Even if you do not qualify for the FHA “Back to Work” Program, there are still be options available to you, and lenders who are willing to work with you to determine the best option for you.
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