Getting ready for an FHA mortgage loan doesn’t just mean checking your credit report and FICO scores, saving up money for a down payment, and reducing your debt-to-income ratio. It also means making important choices about your home and mortgage needs. Some of these choices may need to be made early in the preparation stage, others may come later depending on the type of home you decide to buy. Are you ready for an FHA mortgage loan?
Type Of Home
Believe it or not, the nature of the property you buy with your FHA mortgage loan could affect the type of home loan you apply for. A typical suburban home isn’t the same as a mobile home or a condo. The loans for a condo or manufactured home have different considerations depending on age, location, and other factors. An FHA condo loan requires the condo to be on the FHA approved list, a mobile home must have been constructed on or after June 15, 1976 and be affixed to a permanent foundation.
Condo loans, mobile home loans, new constructions loans and other options are available. Some participating lenders may not offer some types of mortgages (manufactured homes, modular homes, or other options depending on the housing market) so it’s good to discuss such options with a lender before deciding which financial institution to work with.
As you can see from those brief examples, the type of home you choose is an important factor in the FHA mortgage loan process.
Condition Of The Home
Some homes may be older, some may be newer. Some might be in pristine condition while others could require fixes or corrections in order to qualify for an FHA loan. If you are interested in buying a fixer-upper home, there is a different FHA loan option that allows you to buy a home (the FHA 203K rehab loan) with issues requiring fixes that a standard “forward mortgage” might not permit. Knowing whether you want a fixer upper or a new home will be an important detail to discuss with a loan officer.
As with the type of home, some participating lenders may not offer certain types of loans depending on circumstances, the housing market, etc. A fixer upper loan may be what you seek, but make sure your chosen lender offers a rehab loan option as early in the application process as possible.
Location Of The Home
Some borrowers find a property they are seriously considering, but FHA loan rules have specific requirements about homes located near airports, high pressure gas pipelines, special flood zones, and other unique locations.
Make sure you consider the location of the property and ask about such issues before choosing a home to buy with an FHA mortgage. Some areas that are known to be subject to natural disasters may require additional insurance. Others may not qualify due to the nature of a flood zone or other potential issue.
Not all homes in flood zones are automatically rejected for an FHA mortgage loan, but you’ll need to be as informed as possible about such issues going forward so you can make the best decision possible about your new house.