Is a borrower eligible for an FHA purchase mortgage if they sold their property, or will sell their property, that secured a mortgage that was in forbearance due to COVID-19?

A Borrower who was granted mortgage forbearance due to COVID-19 may be eligible for a new FHA-insured Mortgage provided the Borrower has made payments as agreed and the Forbearance Plan is terminated at, or prior to, closing.  If the Borrower has made less than 3 consecutive monthly housing payments since completion of a mortgage Forbearance Plan, the new FHA- insured loan must be manually underwritten following Manual Guidelines in Handbook 4000.1.


For additional information, see: 
Handbook 4000.1, Sections II.A.4.b.iii(K) and II.A.5.a.iii(C) at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-05607
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