An FHA loan is a loan guaranteed by the U.S. government. Specifically, the Federal Housing Administration (FHA), which is a sub-agency of the U.S. Department of Housing and Urban Development (HUD), agrees to repay an FHA mortgage in the event the borrower defaults on his obligations. Qualification for the FHA insurance on a mortgage provides an excess layer of paperwork to the mortgage application process.
Approved Lender
HUD maintains a listing of mortgage brokers and lenders. The first step in the FHA application process involves contacting an approved lender or broker that will assist you complete an application. The link to the HUD site offered in the Resources can help you find an approved lender in your area.
Financial Documents
Collect several financial documents to include in your FHA loan application. For example, you need your two most recent tax returns, including all programs. You also need your pay stubs for the last month, or whether you are self explanatory, your year-to-date profit and loss statement. Ultimately, you also need 3 months of bank statements, such as savings, checking and retirement accounts.
Personal Information
In addition to financial information, collect and provide to your approved lender or broker a collection of private information. Including your current driver’s license, social security card and, if you are divorced and paying for alimony or child support, a copy of the divorce decree and/or the alimony and child support payment order in the court.
Preapproval
After reviewing your own paperwork, your approved lender or broker will be able to preapprove or prequalify you for a mortgage loan. This is a significant step, since the lender will say how much of a loan you qualify for, which gives you a shopping choice for your new residence. Your lender will also inform you of the FHA mortgage limit in your town. You can’t receive.
Closing
The last step in the FHA loan application process is to attend a closing where you will sign a lot of documents offered by your mortgage lender. To begin with, you may sign a promissory note and trust deed that obligate you to repay the loan and permit the lender to foreclose on your house if you don’t. You’ll also sign a lot of disclaimers and notices which are required by national law. Last, you may sign several FHA-specific documents.