The FHA offers many benefits which first-time home buyer can take advantage of. One of these benefits is the ability to purchase a new home with a very low down payment and with less than perfect credit score. Even borrowers who have a significantly lower DTI ratio can take advantage of an FHA home loan. Borrowers can also enjoy more lenient guidelines and requirements when they choose to fund their home loan with an FHA home loan. These advantages are what make the FHA home loan a popular choice over other conventional home loans.
Am I Eligible?
Truth be told, everyone and anyone is able to apply for an FHA home loan, it’s not exclusively for first time home buyers. As long as you meet the minimum guidelines, like, you’re a legal resident of the U.S. and have steady income and employment as well as a decent credit history you could be eligible for an FHA home loan. If you currently own a home that was funded via the FHA home loan program and are not selling but refinancing, unfortunately, you could not get a second FHA home loan. If you are selling and not refinancing you could be eligible for a second FHA home loan.
Applying for an FHA Loan and Processing
The application process for an FHA home loan is quite similar to a conventional home loan. The first step is to find a lender, but not just any lender. You will want to research and shop around different lenders in order to find one that most closely matches your home loan needs. Be sure to compare lender’s rates, guidelines, requirements and receive quotes from each one. Once you have found the lender that best meets your needs, your next step is to fill out the application and be ready to produce the following documentations for your lender to help speed up the qualifying process:
- Full Name and Current Address
- Social Security Cards and Additional Copies
- Employment Information as well as Paystubs
- Any Additional Income you have
- Other Asset Information
All the information above will be used to create your pre-approval. If you’ve already taken the steps to find a house and found the one you’d like to apply to you can skip the “pre-approval” stage and jump right to the start of your loan process. Your lender may need additional information from you not listed above, just be sure you can get it to them in a timely manner as it will help speed along the whole loan process.
After you have applied and you’ve been approved, you will need to make sure you’re ready with any of the down payments or money due by closing. This may include mortgage insurance and closing costs. If you don’t have the money available right away, the FHA will allow borrowers to receive “gifts” for loan the loan process. A gift is money given to you by a friend or family member that can be used towards closing costs or down payments due by the closing date of your home.
Finding a Qualified Lender
Not every lender will offer the same programs nor will they have the same guidelines. This is why it’s important to shop around to different lenders and compare what each lender has to offer. This will help you find a lender who best fits your needs. You can start your lender search right now by clicking the button below and within minutes you’ll be matched with an approved lender eager to help you will all your loan needs and answer any questions you may have. It’s quick and easy to get started and only takes a few minutes.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.