The standard FHA rules specify that a borrower must wait 2 years after a Chapter 7 bankruptcy before they can get another home loan. However, the FHA Back to Work – Extenuating Circumstances Program allows some borrowers to get a loan one year after bankruptcy. Borrowers must prove financial stability and full financial recovery in order to qualify. The borrower must also undergo financial counseling to help them understand their loan obligations, and they must create a household budget.
Eligibility for the Back to Work Program requires that borrowers show proof of employment and the ability to make loan payments. In addition, they must show they had a good credit score before the economic event and for 12 months after the bankruptcy. The financial counseling session must take place from 30 days to 6 months before the loan application is submitted.