December 1, 2020

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FHA Home Loan Pre-Approval And Mortgage Loan Approval

FHA Loan Pre-Approval versus Home Loan Approval

We encourage potential FHA borrowers to get pre-approved for a home loan before house hunting.

If you are new to the home loan process, you might not be sure what the difference is between FHA loan approval and getting pre-approved for an FHA mortgage.

What is that difference? Getting through the initial pre-approval application does not mean you’ve been fully approved for the mortgage. But it IS an important tool for soon-to-be homeowners.

Home loan pre-approval is a tool for both borrower and lender to determine if you’re ready to buy based on your income, debt to income ratio levels, the amount of down payment you have saved, etc.

Think of pre-approval as the start of the loan process, but it is not a guarantee that you have an FHA mortgage loan-yet.

The Pre-Approval Process

Pre-approval requires the borrower to submit their financial information either online or via a lender and checking the results against the bank’s minimum standards and FHA standards.

Do you have good FICO scores? Is your debt-to-income ratio reasonable? How much do you have saved for the FHA minimum required down payment? The answers will determine a lot about your readiness to purchase a home.

Down Payment Issues

Borrowers who have little money saved for a down payment will need to take time to budget and save up for one. The same goes for those who cannot bring 12 months of on-time payments for all financial commitments to the FHA loan application process.

It is best to wait to apply for a loan until you do have 12 solid months of on-time payments on your credit record.

Do you know how much home loan you would like to apply for? What’s the basic price range of the home you are looking for?

Do you know how much you may need to pay for any required flood insurance or related natural disaster insurance (for a home located within a flood plain or other area prone to certain types of natural disasters)?

These are all important questions to ask in the planning stages. If you haven’t gotten pre-approved for a home loan yet, work on answering these questions as you will need the answers to get started.

Home loan approval comes once you have applied for a loan to buy a specific property. Pre-approval gets you closer to that specific property by determining how much you can afford to borrow, how much you are willing to pay for a home, etc.

Talk to a lender about getting pre-approved and what it means to be ready for pre-approval so you can go house hunting versus being ready for a home loan application to buy a home.

About 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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