Buying a home after a Foreclosure up until recently was impossible unless the foreclosure was at least 3 years old. HUD and FHA have a new Program allows borrowers with a Foreclosure to purchase a home after just 12 months.
If you are looking at options for buying a home after a Foreclosure your options were limited at best, until now.
The U.S. Department of Housing and Urban Development (HUD) recently announced the “Back to Work – Extenuating Circumstances” program, aimed to help people who have lost their home through foreclosure, short sale or bankruptcy. HUD has reduced the previously required minimum of 36 months to 12 months before they may be able to finance another home, given that they meet HUD’s minimum eligibility requirements.
Minimum Eligibility Requirements:
To qualify, the borrower must meet several minimum eligibility requirements. The borrower must have experienced an “economic event,” which is any occurrence beyond the borrower’s control that resulted in a loss of employment, loss of income or a combination of both that caused a reduction in the borrower’s household income by 20% or greater that lasted at least six months or longer.
The borrower must have recovered from the “economic event” with the re-establishment of satisfactory credit for a minimum of 12 months and the borrower must attend housing counseling from an approved HUD Housing Counseling Agency.
Second Chance Product Highlights:
- Previous bankruptcy, foreclosures and short-sales are acceptable.
- No longer need to wait three years after a previous foreclosure or two years after a bankruptcy to obtain affordable financing. The minimum is now 12 months.
- Only a 3.5% down payment is required (minimum credit score of 580 required for maximum financing).
- No income restrictions.
- Gift funds permitted.
- Single-family maximum loan amount of $729,750 in high-cost living areas.
- First-time homebuyers are acceptable.