July 2, 2020

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FHA Loans and the Back To Work Program: A Reader Question


A reader asks, “I filed Chapter 7 due to an increase in family size, from 4 to 9. My pay was gone before it hit the bank to pay bills & buy extra food. At the time I filed my credit score was a 680, no late payments. I now want/need to buy a home for me to live in I have a full time job. I kept one creditor & just purchased a new car to get to work. No late payments, will that qualify for the back to work program? I’m not looking to purchase anything out of my comfort zone.”

The FHA Back to Work Program is something that may or may not be offered by participating FHA lenders; borrowers need to shop around for a lender who will agree to make an FHA loan under Back To Work. Not all lenders may offer an FHA loan under Back To Work, but for those who do, the following guidelines apply according to the FHA official site:

“FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:

–certain credit impairments were the result of a loss of employment or a significant loss of Household Income beyond the borrower’s control;

–the borrower has demonstrated full recovery from the event;

–and the borrower has completed housing counseling.”

For those who meet the criteria, finding a participating FHA lender is key–the applicant will need to work with the lender to determine whether or not there are qualifying circumstances that could allow an FHA loan application under Back To Work, and whether the lender is willing to offer an FHA mortgage loan contingent upon participation in Back To Work. Those who are able to apply to the program will be required to get housing counseling as a condition of getting an FHA mortgage under Back To Work.

FHA rules under Back To Work state:

“Borrowers that may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for an FHA-insured mortgage if the borrower

–can document that the delinquencies and/or indications of derogatory credit are the result of an Economic Event…
–has completed satisfactory Housing Counseling…
–meets all other HUD requirements.”

Speak to a participating FHA lender to learn whether your circumstances qualify under Back To Work.

Do you have questions about FHA home loans? Ask us in the comments section.

Joe Wallace - Staff Writer

By Joe Wallace

April 16, 2015

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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