Back to Work Program
The Federal Housing Administration’s Back to Work Program helps former homeowners get back into a home sooner in as little as a year after you have had a short sale, foreclosure, bankruptcy or deed in lieu of foreclosure.
The FHA realizes that, sometimes, credit events may be beyond your control, and that credit histories don’t always reflect a person’s true ability or willingness to pay on a mortgage.
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FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.
Many borrowers experienced periods of recession related financial difficulty and/or credit impairment resulting from unemployment or a severe reduction in income. FHA recognizes the hardships faced by these borrowers, and that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.
For Purchase transactions with case numbers assigned on or after August 15, 2013 through September 30, 2016:
FHA will allow consideration of borrowers who have experienced an extenuating circumstance and can document that certain negative credit ratings resulted from loss of employment or significant loss of Household Income beyond the borrower’s control; and the borrower has demonstrated full recovery from the event and completed housing counseling.
How do I qualify?
If you can document the circumstances listed below in regards to your financial hardship, the FHA will consider you for eligibility:
1. You meet general FHA loan requirements related to such things as employment, income, and credit.
2. You can document the mortgage or credit problems resulted from a financial hardship.
3. You have re-established a responsible credit history since losing your home.
4. You have completed HUD-approved housing counseling.
We can verify that you meet the loan requirements set forth by the FHA before you apply for the FHA loan under the Back to Work program. It will require an explanation of financial hardship beyond your control that caused you to lose your employment and reduce your income.
A twelve month record of on-time rental housing payments with no delinquencies will be required to re-establish credit. You will be required to show that you have a satisfactory payment history on your other monthly payments. In the case of open collections or judgment accounts, a “capacity analysis” will be done to see if you can repay those creditors while still being able to afford a new mortgage.
An extenuating circumstance is any occurrence beyond the borrower’s control that results in:
A 20 percent or more reduction in a borrower’s Household Income for a minimum period of six months resulting from a Loss of Employment, Income or a combination of both. An extenuating circumstance includes the following definitions:
• Onset of an extenuating circumstance: The month of loss of employment/income.
• Recovery from an extenuating circumstance: The re-establishment of satisfactory credit for a minimum of 12 months.