How do you apply for an FHA loan? There are several things you can do to get the process started on an FHA home loan, but the first step is to determine if you are ready to fill out the application paperwork. Some aren’t as ready as they think, while others are definitely able to get started right away. Let’s examine what’s needed to come to the application process.
Preparation And Savings
Preparing for an FHA loan means the doing following things: checking your credit reports so that you see what the lender will see when you fill out your application data, correcting any erroneous entries in your credit report, making sure you have 12 months of on-time payments on all financial obligations before applying, and saving up for your down payment and closing costs.
Saving for your down payment is crucial-all FHA loan borrowers will be required (assuming the loan is approved) to make a 3.5% down payment based on the adjusted value of the home you are buying with your FHA mortgage.
Saving up for other closing costs is important, too. Some cannot be financed into the loan amount and you’ll need to anticipate these expenses.
Deciding On The Loan You Want
There are many choices when it comes to applying for a home loan. Do you want to purchase existing construction or do you have an interest in having a home built to suit with an FHA construction loan? You will need to decide whether you want to apply for a fixed rate mortgage or an adjustable rate mortgage.
That choice depends heavily on your plans for the house. Borrowers who buy planning to move into another home in a few years may wish to consider their adjustable rate mortgage options, while those who plan to be in the home long-term should contemplate their fixed rate mortgage options.
What Type Of Home Are You Interested In?
If you choose to purchase a single-unit home, you won’t have the same concerns as purchasing a multi-unit property, or a mixed-use home. Some borrowers want an FHA condo loan, while others are interested in mobile homes, manufactured homes, or “new construction” properties that have been completed for a year or less.
The considerations for these properties can and often do vary. Condo units must be in a project approved by the FHA, mobile homes have age and foundation requirements unique to those properties, and manufactured homes have specific requirements, also.
Have you worked through these questions already? If you have, chances are good that you are ready to begin the actual application process.
Some borrowers choose to get pre-approved for an FHA loan amount before house hunting; this can be a very good strategy to help you determine what kind of home-and how much home-is right for you. We’ll cover the specifics of the application process in our next blog post.