Recently, FHA has eased lending rules for those who have experienced bankruptcy or a prior foreclosure. Though the economic downturn has caused extreme financial hardship over the past few years, this olive branch from the FHA could help potential borrowers finally get back into a home of their own.
In order to qualify for an FHA mortgage after a previous foreclosure, the borrower must prove the foreclosure was due to income loss during the recent recession. A borrower must show that their income was reduced by 20% for six months or more due to economic factors beyond their control. For example, loss due to layoffs from employers struggling to survive during this time could qualify the potential borrower according to the new FHA standards. If a borrower was fired for a cause or quit their job, they most likely would not be eligible for the FHA prior foreclosure leniency.
The first step in the process is visiting a lender to determine whether you qualify under the new FHA regulations regarding prior foreclosure. Once your qualification is established, you must begin repairing your credit. The FHA asks all applicants who qualify for this program to spend the next year making timely rent and credit card payments. Potential borrowers must also enroll in housing counseling with an agency that is certified by the Department of Housing and Urban Development.
As the economy steadily improves, FHA mortgage loan rates and regulations will change to reflect the economic upswing. If you would like to purchase a home, now is the time to begin improving your credit and speaking with a lender who is familiar with how to handle securing an FHA loan with prior foreclosure or bankruptcy.
It is important to remember that you are not alone in your quest to once again buy a home of your own. The professionals with 1st Alliance Lending have all the tools necessary to provide you with the second chance you and your family deserve. We invite you to contact one of our lending experts today to find out if you qualify for this or any other special mortgage programs currently available.