How to Find FHA Lenders

FHA lenders are vital to getting borrowers approved for FHA, or Federal Housing Administration, loans. FHA approved lenders have the qualifications and expertise to underwrite FHA loan products. These lending companies have undergone stringent evaluation by the FHA, and they must adhere to FHA guidelines when offering loans. The guidelines help ensure that borrowers are treated fairly, and are evaluated using standard criteria.

Borrowers have a variety of options for locating FHA mortgage lenders in their states. They may conduct online searches or seek referrals from family, friends or real estate professionals. The most effective means of finding FHA-qualified lenders is to utilize the lender finder tool on the Department of Housing and Urban Development (HUD) website. Keep reading for more information on how to find an FHA lender that can help you purchase your next home.

What are FHA lenders?

Anyone seeking to apply for an FHA loan must apply with an FHA lender who is approved to offer the loan. FHA lenders are vital to making homeownership affordable to those who would not normally qualify for traditional financing options. Buyers can take advantage of flexible credit requirements and lower down payments when comparing an FHA to a conventional loan. Thus, FHA loans are far more affordable than standard financing, which makes them ideal for first-time homebuyers.

FHA lenders must meet eligibility criteria established by the FHA to participate in the program. Also, once lenders are approved, they must abide by strict FHA underwriting guidelines. Only those lenders approved by the FHA may offer the program, and thus, borrowers should verify the company’s FHA status before applying. To review full details on the best FHA lenders, and why they are essential for helping you finance a home, download our informative guide.

The Importance of Using FHA-Approved Lenders

FHA guidelines help ensure that FHA mortgage lenders follow legal and ethical lending practices. In that manner, FHA lenders use the same standards for each borrower to provide each applicant with the fairest possible chance of getting approved. Specifically, lenders must operate using the same criteria for:

  • Credit score.
  • Down payment.
  • Fees.
  • Income.
  • Loan-to-Value.

Lastly, companies must provide annual reports to the FHA that establishes their adherence to the rules so that they may remain with the program. Companies who do not comply with FHA guidelines run the risk of being disqualified for the program. Borrowers who find an FHA lender can rest assured that they are being evaluated against a set of objective standards that gives them the best chance of getting a loan.

How to Find the Best FHA Lenders

Borrowers have several resources available to locate FHA lenders in their areas. They should employ one – or all – of these methods to ensure they locate the best FHA lenders, with appropriate qualifications and fair business practices, to ensure they have the best experience possible.

Those searching for reputable companies can use the FHA lender finder tool on the HUD website. The tool allows borrowers to narrow the list of applicants based on location so that they can find companies in their areas. Borrowers may also use online searches to locate an ideal lender.

They should check the company’s reviews to determine if the company has a good reputation. In addition, applicants should seek referrals from family and friends. Their real estate agents may also be good sources for lender referrals. For more information on how to find FHA lender candidates, download our comprehensive guide.

Evaluating Qualifications for FHA Lenders

Underwriting any FHA loan requires a level of knowledge and expertise not common, except among highly qualified FHA lenders. As such, borrowers should carefully evaluate FHA loan lenders to ensure the company selected has the qualifications to offer the loan. Not only that, but borrowers need to select lenders with solid reputations for helping clients attain homeownership.

FHA lender companies found using the HUD finder tool have been approved to offer the program. As such, applicants can be confident that if they select a lender from the list, the company is likely to be a quality lender, and have the credentials to offer the mortgage.

Candidates should also check a company’s rating with the Better Business Bureau (BBB). The BBB rating shows past complaints about the business, as well as current customer complaints. Applicants can use this information to determine the company’s history of problems and how the company resolved those issues. Borrowers should also check with the state’s broker’s licensing agency to ensure the FHA lender has a valid license.

Most importantly, however, applicants must be comfortable working with their lenders. The company should explain things clearly to the borrower, and be able to patiently answer all questions an applicant may have. Lenders must also be forthcoming with information, and should readily provide all required disclosures to the borrower. Lastly, the best FHA lender should express that the company has the client’s best interest at heart, and should work hard to help the applicant purchase a home.

Information Needed to Apply With an FHA Lender

Before contacting FHA lenders, applicants should gather all relevant information that may be required during the loan process. Having this information before contacting the FHA lender can help the process go smoother, and helps avoid delays in processing the loan. Information a buyer may want to have ready includes:

  • Pay stubs.
  • Tax forms.
  • Bank statements.
  • Employer contact information.
  • Information regarding outstanding debt.

Also, applicants may want to check their credit reports before contacting any lender. Having this information ready can highlight discrepancies the borrower may need to clean up before applying. Having this information early can also help the FHA lender give the borrower a general idea if they meet basic FHA requirements before completing the application.