FHA loans have become extremely popular over the years, and are currently one of the fasted growing home loan programs available. A lot of this growth is from first-time homebuyers, but there are also plenty of owners who are looking to refinance and take advantage of better interest rates. Whatever the reason, following a few simple tips can help you make the process much easier.
- Be prepared – The FHA asks for a lot of information when you apply for a loan, so be sure you have: all addresses where you have lived, your employer’s name and address, and your W2s and income tax forms that all cover the previous two years.
- Gift of a down payment – The FHA requires a minimum of 3.5% down on a house, but they allow all of it to come from a gift. This can come from a relative, non-profit, or government agency.
- No income restrictions – The FHA does not impose any income restrictions on the loan program, which means this isn’t just for first-time homebuyers. Anyone can qualify.
- Check the lender – Before you apply for a mortgage loan, always check to make sure that the lender actually processes FHA loans and that they are fully FHA approved.
- Know the qualifications – In order to qualify for an FHA mortgage, the borrower must have a positive credit history (though specifications will be set by individual lenders), have a steady employment record, no bankruptcies in the last two years, and keep the payments at around 30% of the gross income or less.
- Shop around – Take a look at different rates when you are looking for a loan. The different lenders set their own rates – this is not something that is set by the government – so this is something that can have a lot of variation.
- Non-occupant co-borrowers – It is possible to have a co-signer help strengthen the application by adding additional income to the loan scenario. This can assist in lowering the overall debt ratio and help you qualify for the loan.
- Know your limits – FHA loans are not a bottomless source of money. There is a maximum limit that you can borrow on these loans, so make sure you know what the current limits are when you start the application process.