How to Apply for an FHA Loan
As NextAdvisor reports, FHA loans are made by approved lenders and insured by the FHA. This guarantee reduces risks for the lenders, so they’re able to offer borrowers loans with lower down payment requirements and relaxed qualification standards. If you want to take advantage of this opportunity, you’ll need to learn how to apply for an FHA loan.
Applying for an FHA Loan
What do you need to do to apply for an FHA loan? The Mortgage Reports offers a step-by-step guide:
- Find a lender. FHA loans are provided by private lenders. This is a popular form of financing, so you’ll have plenty of choices. Select a reputable lender that you feel comfortable working with who offers the services you need.
- Apply for the FHA loan. Submit your loan application. You may be able to do this online, over the phone, or in person.
- Provide basic information. As part of your loan application, your lender will need some basic information about you. This includes your full name, your Social Security number, and a copy of your driver’s license or state-approved ID. You’ll also be asked for data regarding your income and your employment history. In addition, the lender will want to know the address of the property you’re buying, its purchase price, and the amount of your down payment.
- Provide supporting documentation. The lender will pull your credit score and credit reports, but you’ll need to hand over some supporting income and employment documentation. You’ll be asked to provide copies of recent tax returns and W2s, bank statements for any accounts, and pay stubs or statements for any forms of income.
Requirements for an FHA Loan
Although an FHA loan is easier to qualify for than a conventional loan, you will still need to meet certain requirements. Being aware of what a lender is looking for before you apply can improve your chances of success and help you feel more confident. Experian explains what borrowers need to do to qualify for an FHA loan:
- Property matters. An FHA loan can only be used to purchase a new or existing residential property that will be used as your primary residence. It cannot be a vacation home or a second home. However, condos or homes with up to four units may be allowed as long as you plan to live in one of the units.
- FHA appraisal. The home must also pass an FHA appraisal. The purpose of this appraisal is to verify that the home is livable, worth the amount of the loan, and expected to last at least the duration of the loan.
- FHA limits. FHA mortgages come with limits. These vary from county to county and are available on the U.S. Department of Housing and Urban Development’s website.
- Mortgage insurance. One of the costs of using an FHA loan is mortgage insurance. It’s due as part of your mortgage payment and must be paid for the life of the loan.
- Income check. Lenders want to know that they’ll be repaid. They’ll check that you have verifiable income in an amount that allows you to repay the loan.
FHA loans have long been touted as great tools for first-time homebuyers. In fact, these loans can be excellent choices for both novice and experienced buyers. Are you interested in renovating your home, purchasing a fixer-upper, or building a home? There are FHA programs designed for people with those goals. If you’d like to learn more about any type of FHA loan, talk to the loan experts at PrimeLending West Texas. We’ll be happy to help you find the loan product that’s the perfect fit for your housing dreams. Contact us today to get started.