FHA Loans

Should I apply for an FHA loan, and how do I get approved?
An FHA loan is one that is insured by the Federal Housing Administration. Because the loan is backed by the government, lender requirements are less stringent than conventional mortgage loans.
Besides being easier to qualify for, FHA loans have much lower down-payment requirements; borrowers can get a mortgage with as little as 3.5% down.

There are some downsides to FHA loans, though. Borrowers must pay mortgage insurance for the life of the loan, and this extra cost can add up over time. The FHA also charges an upfront free of 1.75% when the loan is originated.

That means the FHA loan is a good option primarily when borrowers simply can’t pay 5% or more down on the loan, have credit issues that prevent them from qualifying for a conventional loan, or have debt-to-income ratios too high for a conventional mortgage. FHA loans also allow the down payment to be made with cash gifted from others, and may be made sooner after bankruptcy or foreclosure than other loans.

Getting an FHA Loan
If you’re in a position where an FHA loan is the only good option for you, then start by reaching out to your lender. They can tell you if you qualify for an FHA loan.
When you’ve gotten the information you need and you think you qualify, it’s time to apply for a loan. You’ll want to get pre-approved. This pre-approval will give you a specific idea of how much you can afford when looking for a home.

Next, find a home. Whether you shop yourself or use a real estate agent, stick within the budget determined by your pre-approval. Any offer you make should be contingent on your financing; that way if your loan application is denied for any reason, you aren’t obligated financially with regard to the home you’re trying to purchase.
The next step is to get the loan. This is the time to shop around and make sure you get the best possible mortgage rate. If you’re working with a real estate agent, they may be able to help you, but always compare multiple options rather than going with the first offer you get.

The loan approval process will include appraisals, insurance, inspections, etc. Take a First-Time Home Buyer course with a HUD-approved housing counseling agency to get all the info you need to navigate this part of the process.

Finally, you’ll close on your FHA loan, and take ownership of your home. You’ll sign some paperwork—perhaps at your real estate agent’s office, a title company, or some other venue, and get the keys to the house. Your lender will give you information about making your payments, and you’ll get copies of all of the signed loan documents.

Remember, whatever kind of mortgage you have, our certified counselors are available free of charge to help you. Call us any time for confidential housing counseling and advice.