A Realtor’s Guide to the FHA Back to Work Program

Help Your Clients Purchase a Home With the FHA Back to Work Program

Under the Federal Housing Administration’s new Back to Work – Extenuating Circumstances mortgage loan program, potential home buyers may have had a foreclosure, short sale, deed-in-lieu of foreclosure, or have declared bankruptcy but can now qualify for a home loan in as little as one year after their financial hardship.

Home Buyer Qualifications

FHA will consider a buyer for eligibility if he/she has had a financial hardship in the past but can now document the following circumstances:

  1. Meet FHA loan requirements
  2. Can document the mortgage or credit problems resulted from a financial hardship
  3. Have re-established a responsible credit history
  4. Have completed HUD-approved housing counseling

A lender will first have to determine if a buyer meets the FHA loan requirements before he/she can apply for a FHA loan under the Back to Work program. The buyer will need to explain how the financial hardship was something beyond his/her control that reduced income or caused a loss of employment. If household income dropped by 20% or more for at least six months, it may count for this type of financial hardship. To re-establish credit, a buyer must have a 12 month record of on-time rental housing payments with no delinquencies, and not have been 30 days late on more than one non-housing loan payment. If the buyer still has any open collection or judgment accounts, then a “capacity analysis” will be done to see if he/she can repay those creditors.

Home Buyer Checklist

  1. Locate an Approved Counseling Agency

    Home buyers must first take a Pre-purchase Counseling session with a HUD-approved housing counseling agency 30 days before starting an application with an FHA-lender.

  2. Get a Counseling Certificate

    Home buyers can complete their one hour counseling session with credit.org’s Priority Pre-purchase Counseling℠ over the phone with no appointment necessary. They can simply call (888) 891-6975 Monday – Friday: 7am to 7pm (Pacific). The fee is $105 and the home buyer is delivered their counseling certificate by email. The certificate is valid for 6 months. Credit.org is a nonprofit, HUD-approved housing counseling agency formed in 1974. An original member of the Homeownership Preservation Foundation, credit.org is dedicated to helping homeowners find the best solutions when facing difficulty with their mortgages.

  3. Locate a Participating Lender

    Finally, the home buyer will need to find a lender participating in the FHA Back to Work – Extenuating Circumstances program and apply 30 days after the date on their counseling certificate.

Fill out my online form.

Back to Top