FHA “Back to Work” is available at Mortgage Master Service Corporation

I’m pleased to inform you that I just received a memo from our management stating that we are accepting HUD”s guidelines for the “Back to Work” program.

HUD’s “Back to Work” guidelines allow people who had a foreclosure, short sale or deed in lieu of foreclosure because of a significant loss of income and/or employment during the recession, to buy a home again quicker than the standard wait period of three years (for FHA).

“Back to Work” provided expanded guidelines for an “extenuating circumstance” and the borrower must be able to document the loss of income and be able to demonstrate that they have re-established their credit for the last 12 months.  I’ve written more about FHA’s “Back to Work” here.

If you are interested in this program, I strongly recommend starting the preapproval process well before you start looking for your next home. If you are considering buying a home anywhere in Washington state, I’m happy to help you!


  1. Were can I take the counseling class a obtain the Certificated of completion to apply for the Back to Work program?

  2. We will reach our 1 year mark on January 30. Can we do anything before then to get the process started or do we have to wait until January 31?

  3. Hi,

    Im a great fit for the new FHA program. But I haven’t read anything about allowing down payment assistance yet below 640 scores. It would sure seem that 98% of people having a foreclosure or a job loss 12 months ago but not have been able to save the required 3.5% after loosing a job in the last year or two. Ive been working on credit from a layoff for a full 12 months, and I didn’t loose a home. Ive only been able to increase my scores by 75 points in one year, and that’s with two new credit cards and everything paid on time. Any ideas on down payment assistance at lower scores, like 600 mid.

    • Hi Mike, down payment assistance may be available with scores as low as 620 with the Home Advantage Program if the home is located in Washington State. Even with this program, your credit needs to be “recovered” with on time payments for the last 12 months.

  4. We have gone through the process of apply for the FHA Back to Work and were denied because my husband was self employed (he had to close the company due to a clients death and immediate closure of that company) the lender indicated that this program is not for the self employed people. Is this true? I cannot find any information that limits this program based on what kind of employment the person applying had.

    • Hi Roberta, I highly recommend getting a second opinion from another lender. Self-employed borrowers are not excluded from the “back to work” extenuating circumstance. A self-employed borrower will need to document the loss of income (minimum of 20% reduction of income for 6 months) and will need to document what caused that loss and that it was at no fault of their own.

      • Just dropping in to offer my experience. If you are a small business owner, don’t waste your time with this program. We went shopping with a pre-approval in hand, 1.5 years out from a short-sale. In contract with a house, 30% down, credit scores over 700. We absolutely 100% met ever FHA requirement for this program. Loan went to underwriting and we were denied because we are small business owners (for for 15 years). This program sounds so great, but is next-to-impossible to actually get approved for. Save yourself the headache and don’t hang your hat on this program, even if you are issued a pre-approval.

        • Kelly, IMO you should not have been denied because of being small business owners. Back to Work does require a ton of documentation (beyond standard FHA loans) to prove the lose of income for the specific time periods. When I try to help clients who are interested in FHA’s Back to Work Program, I run their scenario by underwriting for preapproval before getting too far into the process.

  5. My husband lost his job in Florida in February of 2011. We moved to Seattle and he started contracting for Amazon in April. This is 2 months of reduced income. However, I had to leave my job in Florida and move here, too. I did not start work until late September of that year. Between the two of us, I think we have the 6 months covered. We have no late payments before or after the short sale in Florida, other than the mortgage and HELOC. Our credit scores are around 680. We have been renting out here since May 2011 and would like to buy a home in 2014. Should we sign up for the counseling class and try to get started on qualifying?

    • Hi Dana,
      I’ll run your scenario by our underwriters to see if this possibly qualifies for “Back to Work”. Did your household income go down by 20% or more for that six month period after your husband lost his job? When did the short sale close? I would wait on the counseling until we determine if your scenario qualifies for “Back to Work”. If you short sale closed in 2011, you may be able to buy in 2014 without the changed circumstance (Back to Work). You will need to get a copy of the Final HUD-1 Settlement Statement from the escrow company/attorney who closed the short sale – if you want to send it me, I’m happy to review and help you determine when you can buy again and if you can use “Back to Work”. Regardless, I recommend starting the qualifying process right away (I’m happy to help if you’re buying in Washington state).

      • The official date on the settlement statement is October 3, 2012. Because my husband did not sit around and collect unemployment, we did not have a 20% drop in income. But, we were forced to leave Florida. because there were zero job opportunities. Why doesn’t the FHA consider increased expenses such as moving costs and rent? Having to relocate cost $30,000. It should be “net” loss of income, not “gross”. Our total medicare wages in 2011 were $263,445. This dropped to $236,863 in 2012, which is only a 10% reduction in income. Plus, the cost of living in Washington is way higher than in Florida.

        It is frustrating because the economic event was beyond our control. The house in Florida was beautiful. If I had the same home in the Seattle area, it would sell for over $1 million. It short saled for $219k. Our money was tied up in the house, which we lost, plus the moving expenses added to our debt.

        We currently live in Woodinville and will want to buy in south Snohomish county. It looks like we will have to wait until October 2013.

  6. Hi Rhonda,

    I have completed and meet all aspects of the FHA back to work program(loss of income greater than 20%, good credit history outside of the mortgage all along, counseling completed, tri-merge scores in the 670-700 range). The foreclosure completed 06/2011. Bank of America foreclosed the 1st and the charged off 2nd (purchase money 1st and 2nd- California is a single action state). B of A refuses to give anything in writing and has reported the 2nd as owing the balance but also as a charge off. Big question is with this balance not showing zero on the credit report and as a charge off, can I get FHA back to work program underwriting. I am trying to understand the underwriting guidelines for a 2nd mortgage purchase money charge off situation. 2 lenders I have talked to are telling me that they need the 2nd mortgage to be showing a zero balance before they can underwrite it. I have also heard manual underwriting and DE underwriter many be needed in this situation. Any help is much appreciated.

    • AS&K,
      That’s really difficult for me to answer. A “charge off” does not mean that the borrower is forgiven of the debt and HELOC’s are not treated the same as a “first mortgage” with a foreclosure. If there is a balance showing as “charged off” I wouldn’t be surprised to see a lender try to collect on it – the debt may be sold to another lender. Here is more info on “charge offs” – good luck.

      • Thanks for your response. B of A has not sold the 2nd and have also confirmed they are not collecting it & even issuing a1099c canceling the debt. Now with that said can a FHA Back to Work program be underwritten. Are there any FHA rules or is it completely upto the underwriters. I am getting mixed inputs not sure what the real answer is.


  7. With the back to work program in IL do you get government grants?

  8. hi rhonda,
    would my husband and i be able to qualify for btw program if he was put in a situation where he was either forced to quit his job or be fired? the company he was working for found out that he had a business and wanted him to close it and give them his client. he felt that he was in a lose lose situation and quit to go off on his own. it was a dramatic loss of income and his business took over a year to make any money. he eventually obtained a new job and has since been able to do both business and full time w2 work.

    • IMO your challenge may be in documenting that he was forced to “quite or be fired” – that the loss of income wasn’t from an action he took himself.

      • What if I was simply fired (for reasons they came up with that I was given no chance to defend). I also appealed this but heard nothing back. Would this prevent me from BTW eligibility? I did receive unemployment in IL (which has “No fault of your own” rules as well).

        • If were un-voluntarily fired, then that *should* meet the standards for BTW – your income loss has to be out of your control. With that said, I have not seen a BTW approved by an underwriter. I had a scenario that I thought was a great case, ran it by our underwriter – who agreed with me… the person did not want to go through the hoops to see if they would be approved.

  9. Hi I am three only person working in household of 4. Two children and husband. My husband has not had a steady job in years because he has a record. I filed chapter 7 and it was discharged 7/24/13. I am still only person working would that qualify for BTW FHA loan. Since then no late Payments on record.

    • Hi Tee, as long as you have enough income to qualify for the new mortgage payments and debts, you may qualify for an FHA loan. Please check with a local licensed mortgage professional to see if they can help you.

  10. Hello. My wife had to leave her job to watch our kids because we could afford daycare as she did not make that much. She quit to stay home and watch the children resulting in about a 35% income loss. As a result we did file chapter 7 about 6 months later. Would we qualify for the back to work extenuating circumstances program?

    • Hi Wes, I believe that your scenario would not qualify for “back to work” because she quit her job (made a choice – even though it was a difficult one). With Back to Work, typically the borrower needs to have been laid off or had hours/wages reduced by the employer – the borrower having no choice or option in the situation.

      Back to Work has been very difficult to use – very few borrowers have qualified.

  11. Johnny Confused says

    Hi Rhonda,
    First time reader of you blog. Thank you in advance for your time. I am a little confused and hoping for some clarification. In California, there is a program called GSFA Platinum Down Payment Assistance. Can a borrower use the Back to Work Program and the down payment assistance? I was advise by another broker you can’t. Underwriters want to see you able to make the down payment on your own. He stated I need to have 3.5% down payment on my own without down payment assistance. I called another company and they said I can. Please advise your expertise. Thank you for your response.

    • Johnny, I have yet to close a Back to Work FHA loan… it seems that most either do not meet the criteria or at least, do not meet it strong enough for an underwriter to feel confident about giving the loan her stamp of approval. In addition, I cannot advise on loans that are not for homes in Washington state. I’m not familiar with most out-of-state programs.

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