March 6, 2015
A reader asks, “Can I qualify for a Back to Work Loan if I lost a job and then when I couldn’t find work, started a business with a partner. Two years later the partnership breaks up and I am forced to pursue full-time employment.”
“During the time that I operated the business, my draws reflected a greater than 20% net loss. Now that I am employed full-time, my earnings are the same or greater than the earnings I made prior to losing my job. Also the business is still operated by my former business partner.”
Questions like these are difficult to answer except in general terms. The lender’s standards will play a role in loan approval, so it’s unclear above and beyond FHA loan minimum requirements what the answer might be. However…
A borrower who is currently employed full time, even after owning a business of their own, would have their income and employment verified by the lender. The lender would be responsible for insuring that the income is stable, reliable, and likely to continue.
A borrower who has returned to work after working for themselves might have some additional scrutiny placed on the amount of time they have held the current position, but borrowers should not worry as much about this as they should about the idea of the income being likely to continue.
If you are employed and your prospects for remaining so are good, your chances at loan approval (assuming the borrower is otherwise financially qualified) are better.
FICO scores, loan repayment history and other financial qualifications will come into play with any home loan application, so these areas should not be overlooked. Borrowers who aren’t sure about their chances after returning to the job market can always contact the FHA for a referral to a local FHA/HUD approved housing counselor who can assist with advice on how to proceed in such cases.
Call the FHA directly at their toll-free number: 1-800 CALL FHA.
Do you have questions about FHA loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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