FHA Back to Work Program for People with a Bad Credit History

Over the last several years, the country has made a gradual climb out of financial downturn. Those who suffered through it are still working on their own personal financial recovery as well. During the downturn, millions lost their jobs, lost homes, and suffered from various financial events that damaged their credit scores. While we’re still recovering as a nation, those who suffered from financial issues often struggle more due to the fact that their now-bad credit score is making it harder for them to get loans for a home.

That’s a big part of why the Federal Housing Authority – the FHA – has taken steps to help those who have bad credit history. Known as the FHA Back to Work Program, or the FHA Back to Work –Extenuating Circumstances Program, this program works to help give those who need and deserve a second chance the opportunities that may not be available through any other loans or loan programs.


Basically, the FHA Back to Work Program is set up to make it possible for borrowers with bad credit to qualify for a home loan more quickly than they would otherwise be able to. Whether it was reduced income, a period of unemployment, or a struggle to stay current on bills due to rising ARM rates, those previous troubles won’t preclude you from securing a loan.

This new FHA program works like this:

  • Instead of longer waiting requirements, the program allows you to qualify for an FHA home loan only 12 months after any negative event occurs. Traditionally, it takes 3 to 5 years after one of those negative events occur before you can qualify for an FHA mortgage.
  • Negative events include bankruptcies, short sales, foreclosures, and more.
  • It also has lower credit score requirements than traditional loans, so that even when your credit has suffered as a result of difficult financial events you can still secure a poor credit FHA loan and start getting your life back on track.
  • If you meet the basic requirements of the program, you could still qualify for an FHA mortgage through the program.

So just what are the basic requirements? There are actually only a few things you’ll need to do. These include:

  • You must show that your household income dropped by at least 20% due to loss of a job, a cut in hours, or because the business you own suffered.
  • You must prove that you’ve paid bills regularly for a full 12 months following the negative financial event.
  • You must meet the 500 point credit score limit needed for an FHA loan with low credit scores, or the limit an FHA approved lender sets for financing.
  • You must be gainfully employed at the moment and prove that you are.

If you can meet those basic qualifications, it’s possible to skip that 3 to 5 year period and qualify for a home loan just 12 months after a negative financial event. You’ll still have to meet all of the criteria for the loan itself, but this program makes it much more possible for those who need a loan to get one.

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