New HUD program makes home purchase possible 1 year out of Foreclosure!
Hud recently announced a new program called "Back to Work" that makes it possible to qualify for an FHA 3.5% down payment loan just one year after foreclosure, short sale, bankruptcy or deed-in-lieu.
The thinking behind the program is that so many traditionally responsible home-owners were forced out of their homes through the great recession and are now financially capable of taking on a home loan.
There are some pretty specific requirements that must be met:
1. The home that was lost / short sold / given back to the bank must have been your primary residence.
2. You must be able to demonstrate that you suffered at least a 20% reduction in income for at least a 6 month period leading up to losing your home.
3. You must take a HUD home buyer counseling class at least one month before submitting a new loan application.
4. You must meet all the normal requirements for the FHA program such as income / debt ratios.
5. Your credit since losing your home must demonstrate that you have had not had any additional credit issues.
If you think you are ready to take advantage of the lower prices and lower interest rates and feel that your finances are stable again, this can be a great option. My biggest recommendation would be to meet with a lender at least 2-3 months before you would like to make the purchase so that you can over the program requirements and make sure that there aren't any items on your credit report that will affect your application (and if there are, take measures to fix them!)
With so many home-owners in local towns like Carbondale, Glenwood Springs and New Castle having been forced into foreclosure or short sales over the last few years, this program will present a tremendous opportunity to get back into long term home ownership with home payments that are in line with earnings and rent.
Here is a link to the letter that outlines the required criteria: