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FHA Refinance After Hardship

Published: Thursday, September 05 2013

People always say to expect the unexpected, but sometimes life throws you a curve ball and you are caught off guard. Bankruptcy, unemployment, and financial difficulties are just some examples of unexpected complications that can happen to anyone and affect financing eligibility.


Being temporarily unemployed can cause enough stress on its own, but if you add refinancing a home to that equation it can cause an even bigger burden. If you find yourself in this unfortunate situation you may be wondering how long it takes, after regaining employment, to reestablish your credit.

The good news is, that with an FHA loan you can have a gap in employment of up to 60 days before an explanation is needed. If your new job is salary based you won't need to show income history; just your most recent paycheck stub. If it is base salary plus commission, you'd be able to use the base salary for the first year until you build a history of your commission so it can be considered in the refinancing. If you already have an existing FHA loan and are doing a streamline refinance, income qualification is not as stringent. Normally, the only requirement is that you are able to provide proof of employment and income. Lenders do not have to calculate a debt to income ratio for qualification if the customer already has an FHA loan.

Refinancing with FHA after bankruptcy can be difficult for the first two years after filing. The best thing you can do during this time is try to build your credit score back up. Once you are four years from your file date, if you have a good credit score, you shouldn't experience much trouble with refinancing. At seven years bankruptcy isn't counted at all.

If you have recently dealt with a hardship, such as bankruptcy, and are looking for more information regarding your refinance options; please call RP Funding at 321-397-4420.

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