Many Florida home buyers today are often in search of a limited down payment loan solution. The FHA mortgage still remain on the top choices for home buyers that have less than 20% down payment. Understanding the FHA loan approval process is very important if you plan on getting an FHA home loan in the near future. The FHA is a government organization that insures residential mortgages made by lenders. Their programs can be very helpful to prospective homeowners by offering limited down payments – as low as 3.5% down. Here are the basics of the FHA loan approval process and how it works.
Where to Apply for your FHA Loan:
In order to apply and start your FHA loan application, you will have to locate an approved FHA lender. The FHA does not actually write any loans and therefore, relies on regular banks and mortgage lenders to write the loans for them. The government simply “backs” and insure these mortgages. This means that you should be able to find several FHA lenders in your area. Most banks work with the FHA in some capacity. We can certainly help Florida homebuyers, just call 800-743-7556.
FHA Application and Pre-Qualification:
The first step in the process is pre-qualification, or pre approval process. This step involves you speaking with the lender about your situation and getting pre-qualified. During this step, they will gather information about your housing history, job history, income and liabilities. They will then give you a general idea of how much money you could be able to borrow. The application process requires you to give them a great deal of personal information. They are going to want to know everything about you and your financial situation. You will give them your name, address, social security number, information about your debts, and anything else that they ask for.
Once you apply for the loan, and have a contract to purchase a home, the lender will then process your mortgage. The lender will update all necessary documentation at that time. They will update your credit report, verify your income and your employment situation. They will look at all of the accounts that you have and your total debt. They will use debt-to-income ratios to determine if you meet their borrower guidelines. During this step, they will determine if you pay your bills on time, if you make enough money for the loan you are requesting, and a great deal of other information.
The lender will then want to appraise the house and make sure that they can lend against it. They will dispatch an appraiser to go look at the house come up with a value.
At this point, if everything looks good, they will send the loan to underwriting. This is like a final check to make sure that the loan is acceptable. Sometimes the lender will request additional documentation at this time.
If everything goes well up to this point, they will then schedule a closing. You will attend the closing, sign several papers and then the mortgage and sale of the house will be completed.
Some frequently asked questions below:
What is the maximum loan amount with FHA loans?
The limit is set on a county-by-county basis within each state. You can research limits in your specific area by clicking here. . Each county has a list of four separate numbers; these provide limits for a single-family residence all the way through a quad-residence. If you are purchasing a home with more than four units, you will not qualify under the FHA home loan program.
What credit score do you need for an FHA loan approval?
In order for you to be approved for a FHA, most lenders require a min 640 credit score. FHA loans are forgiving in terms of down payment and even income, but they do have min standards in terms of credit. If you do have previous negative credit history, you may still qualify as long as
- defaults and bankruptcies are more than 3 years old, and
- foreclosures are more than five years old, and
- you do not owe the government any past-due money, including late taxes, OR
- your score suffered from a one-time, negative problem that has since been resolved.
FHA Mortgage Source is Florida’s leading FHA loan resource, serving you 7 days a week. Please call us at ph: 800-743-7556 or submit the quick Info Request Form on the right side of this page. Mobile users will find the Info Request Form here.
Serving all of greater Jacksonville, including Duval, St. Johns and Clay County. Orange Park, St. Augustine, Green Cove Springs. 2015