FHA Loan Checklist: What Do You Need to Qualify?
Applying to own your own home is equal parts exciting and nerve-wracking. The entire process requires organization and patience.
Your lender will require a wealth of information regarding your financial and work history. Lenders won’t move forward unless they receive this information, so be sure to send it to them as soon as possible.
In addition to your lender, the seller and title company will also ask to be privy to this information.
To get organized, use our FHA loan checklist guide.
What’s the Reason for All this Documentation?
Well, quite frankly, the recession and housing crisis of 2009 brought some glaring problems to light.
Lenders weren’t requiring enough information from potential buyers. Therefore, unqualified people slipped through the cracks.
To stop this problem from happening again, the Federal government mandated a new rule.
Regulation Z, which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, makes it illegal for lenders to approve high-rate mortgage loans without thoroughly investigating a buyer’s financial history.
Creditors must also keep financial evidence on file to ensure that they have followed this rule.
One of the most important documents you’ll need for your FHA loan checklist will be your loan application.
The Uniform Residential Loan Application also known as Fannie Mae Form 1003 is a standard loan application issued by all lenders.
In this form, you’ll list information regarding your employment history, property information, assets and liabilities, monthly income and combined housing expense information.
Lenders will also request a copy of your credit report. You can visit any of the three credit bureaus online to request a copy of your report. Each year, the bureaus also issue one free copy of your credit report.
Employment verification is another big one. The lender will contact your employer and ask for their phone number and address.
Social Security Number Verification
The lender will ask for verification of your social security number. They’ll accept a photocopy of your social security card.
Federal Tax Returns
The US Department of Housing and Urban Development (HUD) requires the submission of your federal tax returns as part of the lending process. This way, the underwriting can examine your yearly income and ability to make mortgage payments.
This is the written agreement between the buyer and seller of the home. Both parties must sign and date the agreement to complete the mortgage process.
The sales contract will also include any amendments ad real estate certifications. The real estate agents will sign the contract to validate its terms.
An appraisal report is mandatory for all FHA-insured home loans. The appraiser will determine the home’s market value and ensure the home meets all necessary requirements.
To complete the appraisal, the appraiser will receive a special form called the Uniform Residential Appraisal Report (Fannie Mae Form 1004).
The form must be completed before the mortgage process goes any further.
FHA Amendatory Clause
This is a big one. FHA-insured home loans allow buyers to back out of the deal, with no loss on their deposit, if the home is appraised below the asking price.
This is one of the amendments included in the sales contract.
Completing Your FHA Loan Checklist
We’ve covered all the necessary documents for the home loan process. Next, speak to your lender and read our blogs and detailed checklist to find out more about FHA loans.
If you have any questions, feel free to reach out to us today!