You may still be able to purchase a new home
The Federal Housing Authority has announced it is shortening the waiting periods for homeowners with negative marks on their credit, such as a short sale, deed-in-lieu, foreclosure or even bankruptcy to buy again with an FHA loan.
Instead of the mandatory 3 years before qualifying for a new loan, buyers may be able to purchase in just 12 months!
The new deal is part of the FHA's "Back to Work - Extenuating Circumstances Program".
The program has pretty strict requirements. Potential borrowers must:
1.) Prove that the foreclosure or short sale was caused by what the FHA calls an "economic event" -- a loss of income and/or employment, that was beyond the control of the borrower must have caused an income reduction of at least twenty percent six months or more.
2.) Borrowers must prove that they have "fully recovered" from the "economic event" that led to the event and must prove that their credit was good before the "economic event", meaning that their credit report was free from derogatory credit issues. Borrowers must also show that since the event the borrower has maintained satisfactory credit over the past twelve months.
3.) Borrowers must also complete at least one hour of one-on-one counselling from a HUD-approved counsellor at least thirty days but no more than six months before applying for an FHA loan.
After meeting all the requirements, borrowers can qualify for an FHA loan, which allows them a mortgage with just 3.5% down.