Do you know how to apply for an FHA loan? Getting an FHA mortgage is much like any other type of home loan when it comes to taking the same amount of time to prepare, examine and improve your credit rating, reduce your debt-to-income ratio, and other issues that can help with loan approval.
Good preparation is the key to any home loan, even those that have more forgiving credit requirements such as FHA mortgages. Your lender will need to see proof that you are a good credit risk, have a stable and reliable form of income, and have an acceptable amount of debt compared to the amount of income you get each month.
So how do you apply for an FHA loan?
It is strongly advise that borrowers give themselves a year ahead of their actual application to get ready. One reason for this is that you will need to have a full 12 months of on-time payments on all financial obligations. Coming to the loan process with anything less than this may jeopardize your chances at loan approval. Consider this 12 month time period to be part of your application process.
There are two basic ways home buyers can approach applying for an FHA loan. One is to search for a home, then find a lender to buy that home. But another way to consider is getting pre-approved for an FHA mortgage before you start house hunting.
Getting Pre-Approved For A Home Loan
FHA loan pre-approval involves finding a participating FHA lender and answering some basic questions about the type of mortgage loan you seek (fixed rate, adjustable rate, etc.), your income, the estimated purchase price of the home. It’s a very good idea to learn how much loan you can afford by using an online mortgage calculator, which can help you learn what your anticipated monthly mortgage payment might be depending on the cost of the property.
Pre-approval should not be confused with loan approval. Getting pre-approved means your chosen participating FHA lender has made a basic determination about your eligibility for a loan, but the actual loan paperwork won’t be started until you find the house you want to purchase, make the offer, get the appraisal and then have the lender approve the actual loan.
That loan may include extras the borrower chooses to finance such as approved closing costs, etc. You will be required to make a minimum down payment on your mortgage loan, pay certain closing costs up front, and you should definitely choose to pay for the optional, but crucial home inspection in order to make the most informed purchase you can.
In our next blog post we’ll examine what it takes to apply for an FHA loan-what do you need to have before you fill out the loan paperwork?