Buying a home is a dream for many people, but getting qualified for a loan can be tricky. Especially if you’re a first-time home buyer or if you have some bumps in your financial history, getting the loan for your dream home can be a challenge. That’s where an FHA loan might be able to help.
In this article, we’ll talk about what FHA loans are, what the income and inspection requirements are, and how you can apply for an FHA loan.
What is an FHA Loan?
An FHA is a government-backed mortgage loan that can help you buy a home with looser financial requirements than a traditional mortgage loan. Many people can qualify for an FHA loan if they have other debt, poor credit, or a larger financial issue like bankruptcy on their record.
FHA loans are backed by the Federal Housing Administration (FHA), and are insured by the FHA. This means that the owners of your mortgage are protected against loss if you default on your loan. Because of this, FHA loans are often available with low down payment options and lower minimum credit score limits—but it does mean you have to pay mortgage insurance.
FHA Loan Requirements
Although FHA loans have different requirements than traditional loans, there are requirements you do have to meet, including:
- Your potential home must be appraised by an FHA-approved appraiser.
- You can only use a new FHA loan on your primary residence, meaning it can’t be used for a second home or investment property.
- You must occupy the home within 60 days of closing.
- You have to meet the FHA loan inspection requirements, and the property must meet minimum property standards.
There are a few other requirements, like a required down payment amount, mortgage insurance, credit score, and loan limits. Your lender will be able to walk you through these specifics in more detail.
FHA Loan Rates
The interest rate for FHA loans depends on a lot of factors, like your income and credit score, the amount you want to borrow, your down payment, prevailing interest rates, and more. But in general, FHA loan rates are lower than conventional mortgages because government backing allows lenders to offer lower rates.
How to Apply for an FHA Loan
If you think an FHA loan might be right for you, there are a few steps you need to take to apply.
First, find an FHA-approved lender. The good news is that most lenders are able to offer FHA loans, so you can pick one based on your credit score, income, and amount. Shop around at a few different lenders to make sure you get the best rates.
Next, actually apply for the loan. Many lenders let you apply online and then will connect you with a loan officer to complete the process. You’ll need to have basic information on hand, like your income, monthly debts, and down payment funds.
Third, give your lender permission to verify your credit score. Like any loan, FHA loans require a credit check before you can move forward.
Then, you’ll need to collect proof of your income and employment history. Most lenders require pay stubs from the last 30 days and W-2s from the last two years. Lenders will also typically review two months’ worth of bank statements to verify that you have the funds for a down payment.
Let Us Help You Get Your Dream Home
If you think an FHA loan is the right move for you, we can help you through the whole process. Contact us today to discuss your loan options, and we’ll help you find the right one for you.
