June 24, 2019

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FHA Mortgage Loan Approval For First-Time Borrowers

FHA Mortgage Loan Approval For First-Time Borrowers

What does it take for a first-time borrower to get home loan approval with an FHA mortgage?

There are several areas to pay attention to; don’t make the common first-time buyer mistake of thinking that FICO scores are the only thing that matter when it comes time for your lender to approve your mortgage loan.

First Time Buyer Home Loan Approval Criteria: Employment

FHA loan rules require your lender to verify two years of employment, though those two years do not have to be with the same company.

What borrowers should know about this requirement is that the lender wants to know if your income is stable and likely to continue long after the loan has been closed.

Generally a lender wants to know if your current income will allow you to afford the loan and that your employment stability won’t be an issue.

Home Loan Approval Criteria: Credit Use

Your overall patterns of credit use will go a long way toward helping the lender decide to approve your mortgage loan application. Are you a responsible credit user? Do you carry lower balances on your cards and pay on time?

Not all credit is alike. Store credit cards may not carry the same clout with your lender as a Visa or Mastercard credit card account or other types of “major credit”. If you have “thin” credit, consider applying for a secured credit card rather than a store card at a big box retail chain.

First-Time Buyers Should Avoid This Major Credit Mistake

Don’t apply for any other lines of credit-even store cards or “minor” credit accounts-when you are getting ready to approach a lender for a mortgage loan.

Adding more potential credit card debt and getting a hard inquiry on your credit report will do more to hurt your chances at home loan approval than they will to help you in the short-term.

Remember that your existing credit accounts don’t just represent your current amount of debt, they also represent your potential debt based on the unused balances on your cards.

It helps to approach the FHA home loan process with the mindset of a loan officer. What will it take for you to get your home loan approved? A combination of FICO scores, credit use, employment stability, and your ability to afford the mortgage.

Don’t assume you are not qualified for an FHA home loan as a first-time buyer even if you have some credit mistakes in your past. Let your lender determine what you can and cannot qualify for.

Joe Wallace - Staff Writer

By Joe Wallace

February 8, 2019

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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About FHANewsBlog.com
FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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