New FHA Lending Guidelines Benefit Mortgage Hopefuls Who Lost their Homes
Good news for potential homebuyers who have struggled for years to find financing following a short sale or foreclosure. After years of strict policies making traditional home buying almost impossible after a short sale, foreclosure or bankruptcy, the FHA is finally relaxing the rules and opening up financing in certain circumstances. The new policy allows borrowers to qualify for a mortgage within one year following a short sale, foreclosure, or even bankruptcy.
In order to qualify under FHA’s new guidelines, the borrower must:
(1) have a minimum credit score of 620; and
(2) the borrower must demonstrate that he or she experienced an “Economic Event that resulted in a severe reduction in income due to a job loss or other circumstances resulting in reduced household income.”
The bottom line- as long as a borrower has a decent credit score and can show a job loss or reduction in income caused the loss, a borrower may now qualify for FHA financing just one year after a short sale, bankruptcy, or foreclosure.
This is excellent news for those who have been rebuilding their credit after a bankruptcy or the loss of a home and would like to purchase a new home. The guidelines are now allowing those of us who have learned from the mistakes of the past to begin rebuilding.
For more information regarding the new FHA guidelines, click to read the attached FHA Mortgagee Letter 2013-26