How to Get an FHA Loan

Homeowners who wish to apply for FHA loan approval must qualify for the loan based on their credit scores, income levels and down payments. Due to flexible loan terms when submitting an FHA loan application, the program is ideal for first-time homebuyers. With credit score requirements as low as 580 and a lower down payment, homeownership is attainable for borrowers who would not normally qualify for conventional loans, compared to FHA loans.

Borrowers who wish to apply for an FHA loan must provide proof of income, as well as their credit histories. The lender requires applicants to provide paystubs, W-2 forms and bank statements, along with their applications. Borrowers must apply for the program through an FHA-approved lender. An FHA-approved lender is one that is approved to provide the loans per FHA guidelines. Read further for full details on how to apply for FHA loan assistance and the documentation required when applying. You will also learn where to apply for FHA loan approval so that you can be on your way to home ownership.

Do I qualify to apply for an FHA loan?

Per the Department of Housing and Urban Development (HUD) guidelines, those who wish to apply for FHA loans must meet basic credit, income and down payment requirements. First-time homebuyers are excellent candidates to apply for FHA loan assistance. The flexible credit score and small down payment options make home ownership more attainable than many homeowners believe possible. For most conventional loans, borrowers must have a credit score of well over 600. With an FHA loan, however, borrowers can qualify with a score as low as 580.

Along with meeting credit score requirements when learning how to apply for FHA loan assistance, borrowers must contribute to the home purchase by making a down payment of at least 3.5 percent of the purchase price. Borrowers may be able to use gift funds for their down payments. However, the FHA has strict guidelines regarding the amount and source of the gift. Borrowers should consult with their lenders for details on gifts for down payments.

Additionally, lenders use a borrower’s income to determine how much of a loan he or she can afford. In most cases, however, the maximum limit for an FHA loan is $294,515 for a single-family home. Download our comprehensive guide to read more about FHA loan limits.

Documentation Required to Apply for FHA Loans

Those who wish to apply for FHA loans must provide evidence to their lenders that they meet the eligibility guidelines for the program. A borrower who submits an FHA loan application must provide a variety of documentation along with the application. Specifically, buyers must provide:

  • Proof of identity with a driver’s license or state ID card.
  • Proof of income with paystubs, W-2 forms and bank statements.
  • Evidence of the source of their down payments for the home.

Lastly, borrowers who submit the FHA loan application paperwork must demonstrate their creditworthiness by allowing the lender to review their credit reports. The borrower does not need to provide the report, but rather, he or she must authorize the lender to request it from the credit bureaus. Learn about the full details on the documents required to apply for an FHA loan by downloading our informative guide.

How to Complete an FHA Loan Application

Lenders require borrowers to complete the FHA loan application when requesting a loan. The lender uses the information on the FHA loan application to validate that the borrower meets qualifications for the loan. Each lender uses what is known as the Uniform Residential Loan Application (URLA) to collect this information. When completing an application, borrowers must provide the following information:

  • Type of mortgage requested (FHA)
  • Property address
  • Purchase price
  • Borrower name(s)
  • Income
  • Assets
  • Liabilities
  • Employment information

Applicants must be truthful in their answers when they submit the FHA loan application. Providing false information could result in their loans being denied.

How to Apply for FHA Loan Approval

Borrowers must first find FHA-approved lenders when applying for FHA loans. An FHA-approved lender is one that reviews FHA loan applications, and offers loans according to FHA guidelines. Loan applicants must ensure that their lenders are approved lenders before applying for their loans, as not all lenders hold the designation.

Applicants may find an FHA-approved lender by searching the HUD lender list on the HUD website. They may narrow their searches by selecting a specific state, city or county. They may also narrow the list by searching for lenders who finance single-family homes versus those who finance multi-family dwellings.

How to Get an FHA Loan Through a Lender

Many lenders take FHA loan applications in person. The borrower must meet with a loan officer who collects the information and helps the borrower complete the application. The loan officer is the borrower’s point of contact throughout the application process.

How to Get an FHA Loan Online

Some lenders also offer a process for borrowers to apply for FHA loans online. Applicants submit the same information required in the URLA using the lender’s website. Each lender has specific methods and websites for taking loan applications online. Borrowers should consult with their lenders for specific procedures.

FHA Loan Fees and Payment Estimates

Once an applicant submits an FHA loan application, the lender uses the information to determine how much the borrower will pay for the loan. The FHA loan fees estimate includes the loan amount, the closing costs, the monthly payment amount, the interest rate and the taxes. A lender must provide this information within three business days of the borrower’s application.

The borrower then evaluates the information to determine if he or she wishes to proceed with the loan. Lenders are required to honor the terms of the estimate for 10 business days. Applicants must notify the lender within that timeframe if they wish to move forward with FHA loan application procedures.

If a borrower does not inform the lender within 10 days, the lender may choose to provide a new estimate that may be different than what was initially offered. As such, borrowers should pay attention to the timeframe, as they could miss out on favorable loan terms if they wait too long.