FHA Loan Qualification and Tips To Get Approved
FHA loan qualification is an important process that typically comes before you actually submit your paperwork for processing/underwriting. For now, let’s go ahead and assume that you are able to meet all the requirements for qualifying for the FHA loan! This means that you are already aware of the minimal requirements to getting the FHA loan. And if you don’t already know, here are a few tips you can use to ensure that you get the right home loan at the end of the day.
Get The Paperwork Ready!
Once you have done your research about the FHA loan guidelines, it is advisable to get your paperwork ready beforehand. Your lender will ask for extensive details about your personal 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 will require a decent financial background. This is the summary of the paperwork you will need to complete; (dealing with information from the past two years)
Be ready to provide your past two years worth of:
- 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. This means that not every lender has the authority to provide this type of government insured loan. It is in your favor to make sure that when you are looking for a lender in your area, ask for confirmation that he/she is FHA approved to avoid any sort of delays. 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. Also, if you request expert advice using the FHA Loan Search Expert Form, a mortgage expert will provide you with guidance.
Save Up For 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 by state but it is usually 96.5% of the entire amount. Therefore, it is advisable to start saving up! As you save money, be sure that you closely monitor your credit scores for accuracy because this will ultimately factor into your loan approval.
Get 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 home purchase price, there is considerable risk that is being accepted in the deal. The mortgage insurance is a financial product that prevents the lender from facing any loss if you fail to pay up on the mortgage.
To make things easier, the lender that you decide to work with will be able to provide you with a number of options to consider 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 The Property Appraised
Even if you get your home loan pre-approved, it does not guarantee that you will actually get the loan. There are specific property condition requirements and your lender may disapprove your loan after a failed property inspection. To avoid any wasted time or surprises, it is important that the property in question is 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. An approved appraiser will be knowledgeable of what FHA requires and ensure that you have the best opportunity for success.
Once you have jumped through these hurdles, at last, work with your mortgage broker to complete your loan application. This is a process that requires time, thought, and care… When in doubt about something in the form, be sure request help from your lender or an approved source.
To learn about the FHA loan underwriting and loan processing phase, Click Here.