If you are looking to buy a home soon, there is a bunch of information you need to make yourself aware of. One option you have is through an FHA loan. If you think that’s an option for you, you need to get yourself updated with the process of getting an FHA loan, including requirements, rules, and regulations established by the FHA. Knowing these details will make it a bit easier for you to qualify for an FHA loan.
FHA Loans Requirements and Documents
First up in the entire process is making sure you’ve got all your requirements ready. Check all requirements one by one and make sure you have everything. Also make sure your documents are the most recent versions. You don’t want to be held up because of an outdated document. One important detail to bring is your latest address and proof of it. Another is your employment or business information. All of these need to be presented. Next is a list of open loans you currently have. Do not forget your bank account details as well, and with it your list of assets and your tax documents. For veterans, certificate of eligibility is required along with the DD Form 214. This form is commonly known as the discharge papers. Again, this document is required.
For an FHA home loan approval, you need to have at least two years of steady income or employment. The mortgage payment approved will be 30% of your income or less. Your financial payments will be verified and it should only be 41% or less. Financial payments include but are not limited to home or real estate, car loan payments, credit card payments, and more. One federally-backed loan is permitted at a time.
Moreover, with any FHA loans, in cases where the borrower/applicant have gone through bankruptcy, the bankruptcy must be as old as two years or more, with proof if good to outstanding credit after the bankruptcy. This rule applies with foreclosures as well, but instead of two years, it becomes three.
FHA loans are hugely popular because of the number of benefits it presents. First is that this loan usually have low down payment requirements. In most cases, it’s usually around 3% of the loan amount. In some cases, it is even lesser than that. Another handy benefit is the interest rate, which is almost all the time lower than any other conventional loans. The third FHA loan benefit worthy to be mentioned is the credit rating standard. Additionally, it does not require perfect credit ratings. This is the reason why most first-time home owners and borrowers go for FHA loans.
The information shared here are the basic ones. If you are looking to apply for one, it is still advisable to get advice and guidance from FHA approved lenders. They are the most equipped and knowledgeable to give you all the details and options you need. Bear in mind that FHA loans are not the same with every lender, so take time to look at a few options before deciding.