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Steps To Obtain a FHA Loan

An FHA loan is one that is insured or backed by the Federal Housing Administration and the government controls the guidelines to underwrite these types of loans. All the lenders that use FHA loans have to be approved by the FHA. There are a lot of loan programs that you can get through an FHA loan, including mortgage refinancing and a bad credit mortgage. Sometimes there is only a three percent down payment, as compared to a higher rate for a standard mortgage. There are some steps that you will need to take if you are thinking of getting an FHA loan. 


There are a lot of financial institutions that are qualified to offer FHA loans, but you will want to first look around to make sure the institutions that you are looking at will be able to offer them. Each lender will offer different products within the FHA loans, and you will need to talk to them and see which one you think is the best for you. Something that might help you to determine this is if you are purchasing a new home or getting a mortgage refinance. 


The next step to take is getting pre-approved from your lender, which is something you have to do before some people will even let you look at their home. This will help you determine if you meet the requirements, including good credit history and income levels for the FHA loan that you are thinking of getting. If you have any federal liens, they will need to be paid off or else you will not qualify for an FHA loan, and this is discovered during the pre-approval process. 


The next thing you should do is find out what documentation you are going to need and start collecting it. The lender will ask you for all of this, and it is a good idea to be prepared with it. Some of the documentation you will need are things such as proof of income, paystubs, bank statements, proof of employment, W-2’s, tax returns, and proof of assets. When the lender has the documentation that is required and has decided that you will qualify, you will be approved and can start the closing, which you will need to have the closing costs to cover. Lenders have different policies concerning closing costs, also with different interest rates, even if they offer the same products. One thing to consider when shopping around for a lender is the closing costs and interest rates, because this is what lenders get competitive with. When you know all of this, you will be better able to decide if an FHA loan is the perfect loan for you.