September 14, 2013
Bankruptcy -In fact, even if you have had credit problems, such as a Chapter 7, it's easier for you to qualify for an FHA loan. FHA allows you to refinance or purchase a house after Chapter 7.
At least two years must have elapsed since the discharge date of the
borrower and / or spouse's Chapter 7, according to FHA
guidelines. This is not to be confused with the filing date.
A full explanation will be required with the loan application. In order
to qualify for an FHA loan, the borrower must qualify financially, have
re-established good credit, and have a stable job.
Minimum Credit Score
On January 20, 2010 FHA announced a policy change to address risk and strengthen finances. FHA changed the minimum credit scores for new borrowers:
August 15, 2013 - Borrowers with a prior bankruptcy, foreclosure, deed-in-lieu, or short sale may be eligible for an FHA insured loan if the bankruptcy, foreclosure, deed-in-lieu, short sale was the result of a documented extenuating circumstance.
Borrowers may also be eligible for an FHA insured loan on a purchase transaction after 12 months from the completion, discharge, trustee's sale if the borrower meets the requirements for extenuating circumstances Economic Event.
A few key items for borrowers applying under the enhanced guidelines:
To be eligible for these enhancements, borrowers must have experienced a minimum of 20% reduction to the household income for duration of at least six (6) months. Written VOE’s from previous employers and tax returns will be required for all household members; this can require verifying prior income and employment for individuals not on the new transaction.
Household income is defined as all parties on the prior Note/Deed of foreclosed property even if they are not on the new transaction. If there was no prior mortgage/foreclosure, then the guidelines are applied to the borrowers of the current loan. Borrowers must have a satisfactory credit history prior to the Economic Event. Borrowers with habitual late pays, disregard for credit, mismanagement are not eligible for these enhancements.
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