Congratulations! You have all the requirements for qualifying for the FHA loan! Once you are aware of the minimal requirements of getting the FHA loan, here are a few tips you can use to ensure that you get the loan at the end of the day. Note that it is not enough to just get all your FHA loan qualifications or documents ready, you also need to know the entire loan process!
FHA Loan Qualifications & Steps
Get The Paperwork Ready
Once you have done your research about the FHA loan, it is advisable to get your paperwork ready beforehand. Your lender will require extensive details about your finances, taxes and proof of income. Notwithstanding the fact that the FHA loan usually caters to everyone irrespective of financial standing, chances of getting the approved loan lie on a decent financial background. This is the summary of all the paperwork you will need to complete; (dealing with information from the past two years)
- Valid W2 forms
- Income tax forms
- Addresses and locations of the places you have lived in
- Addresses, locations and monthly salary information from employers
Deal with an Approved FHA Lender
The FHA loan can only be provided by federally-approved lenders. Not every other lender has the authority to provide this loan. Make sure that when you are looking for a lender in your area, he is FHA approved. The United States Department of Housing and Urban Development has made this process easy by listing a FHA lender finder option on their website, according to your area.
Save up for the Down Payment
Though the amount set up by the FHA is extremely low for down payment, i.e. a minimum of 3.5%, you have no way around it. One cannot get the loan until and unless this lump sum amount has been paid beforehand. The maximum loan allowance varies state-wise but it is usually 96.5% of the entire amount. Therefore, it is advisable to start saving up!
(READ: 4 Mortgage Tips for First Time Buyers)
Get a Mortgage Insurance
Mortgage insurance is something that you are required to apply for by law. Since the amount loaned by the lender is almost 97% of the entire payment, he is at a risk. The mortgage insurance prevents the lender from facing any loss if you fail to pay up on the mortgage.
The lender that you have decided on will be able to provide you with a number of options to sign up for mortgage insurance. The annual premium of the mortgage insurance has to be paid by you; however, the FHA can pay for the upfront mortgage insurance premium.
Get Your Property Appraised
Even if you get your loan pre-approved, it does not guarantee a loan. Your lender may disapprove your loan after a failed property inspection. You need to get the property in question appraised by an FHA-approved appraiser to determine the actual value of the property (with respect to the values of other properties in the same area) and to ensure compilation with all health and safety regulations.
Finally, complete your application carefully and when in doubt about something in the form, feel free to refer or take help from your lender or an approved source. Here at FHALoanSearch, we offer you guidance and tips on how to get your home without the usual complications. Feel free to contact us and we will be happy to provide you answers to any questions that you may have!