FHA Back to Work: Get a mortgage loan with a foreclosure, bankruptcy or short sale under your belt.

The past few years were unfortunate times for many homeowners.  A struggling economy and shortage in jobs caused  many bankruptcy’s, short sales, Deed-in-Lieu foreclosures and foreclosures for many homeowners that were left unemployed after years of experience and long time positions.  The loss of jobs also made it difficult to get a mortgage loan after the fact.

FHA insured home loans are known to have lenient qualification requirements, but there are still a few circumstances where a potential FHA applicant would be required to wait for a certain number of years for past derogatory economic event to cancel out before they can be approved for an FHA loan.   These derogatory events include a bankruptcy, mortgage foreclosure, pre-foreclosure sale or deed-in-lieu. All of which usually have the following wait times in order to be considered for an FHA insurance mortgage.

However, shorter waiting periods can be applied if the borrower can prove to have lost their home when  in an economic event considered an extenuating circumstance, these have shorter wait times .

Derogatory Event Waiting Period Requirements Waiting Period Requirements with Extenuating Cicumstances
Bankruptcy — Chapter 7 or 11 4 years 2 years
Bankruptcy — Chapter 13
  • 2 years from discharge date
  • 4 years from dismissal date
  • 2 years from discharge date
  • 2 years from dismissal date
Multiple Bankruptcy Filings 5 years if more than one filing within the past 7 years 3 years from the most recent discharge or dismissal date
Foreclosure 7 years 3 years Additional requirements after 3 years up to 7 years:

  • 90% maximum LTV ratios
  • Purchase, principal residence
  • Limited cash-out refinance, all occupancy types
Deed-in-Lieu of Foreclosure or Pre-foreclosure Sale
  • 2 years — 80% maximum LTV ratios
  • 4 years — 90% maximum LTV ratios
  • 7 years — LTV ratios per the FHA Eligibility Matrix
 2 years — 90% maximum LTV ratios

Extenuating Circumstance

For shorter wait times to be applied the definition of an extenuating circumstance must be the following:

  • Credit impairments that were result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control.

I got my job back… Now can I qualify for a mortgage?

In order to qualify for a loan with extenuating circumstance’s a borrower must prove a satisfactory credit requirements, employment and be able to document the loss of income from the past for a period of 6 months with consecutive deductions of income of at least 20%.

For information on this product to see if you can be pre-approved with this program or for any other lending scenario’s.  Please contact me directly.