An FHA mortgage is one of the great ways of buying a home without the need for a large down payment or a perfect credit score. While they are backed by the federal government, FHA mortgages are available from almost any private lender. Hence it becomes easier to apply and shop at lower rates.
You are free to start your application online. And in some cases can even be closed online. Or you can work face to face with the loan officer for additional guidance. You get to choose your lender and how you want to apply.
FHA loans are available to those with a credit score of 580 or higher and a low down payment of 3.5%. This makes FHA loans more accessible than other mortgages.
Documents Required to Apply for an FHA Loan
When you initially apply for an FHA loan, the lender will ask about your income, savings, loans and assets. Once you decide to go ahead with the loan, they will require proof of the information you have provided. This means that different types of financial documents may have to be submitted.
- Tax returns for the last two years
- W2s for the last two years
- Bank details of last 60 days
- Financial statements for other assets (investment accounts and retirement accounts)
- recent pay stubs
- Proof of other income such as Social Security or disability income
- Name and address of your employers in the last two years
- Year-to-Date Profit and Loss Statement, If You’re Self-Employed
FHA Loan Requirements
- Here FICO® scores at least 580 = 3.5% down payment.
- FICO® score between 500 and 579 = 10% down payment required.
- MIP (Mortgage Insurance Premium) is also required in this.
- Debt-to-Income Ratio <43% would be required.
- The home should be the primary residence of the borrower.
- The borrower also needs to have a stable income and proof of employment.
How to Apply for FHA Loan?
FHA loans are insured by the Federal Housing Administration, a branch of the Department of Housing and Urban Development (HUD). Thanks to their government insurance, FHA loans can offer low down payments, low credit requirements and low rates to help low to middle-income buyers achieve their goals of homeownership.
Although FHA mortgages are insured by the FHA, this agency does not actually lend the money. You get an FHA loan from a private lender, just like you would a traditional loan.
All you need to do to get the loan is to choose a lender with whom you want to apply.
Step 1: Find a Lender
The very first step in getting an FHA home loan is to find the right FHA-approved lender. And most banks and mortgage companies continue to offer this type of mortgage. So finding a lender is not very difficult.
You can get FHA financing from banks, mortgage brokers, credit unions and online lenders. You’ll also be able to use our review of the best FHA lenders as a starting point.
The right lender for you will depend on a few things. As you have a low credit score, you’ll want to make sure your lender accepts the FHA’s minimum of 580 (and some lenders set the bar at 600 or higher).
Step 2: Apply for an FHA loan
After finding the lender you need to submit your loan application. Many lenders let you apply for the FHA Home Loan Application online, although some connect you with a loan officer to complete your application over the phone or via email.
Along with this, you have to add the necessary documents. Which the lender will demand at the time of completing the application.
- Your full name
- Your Social Security Number
- A copy of your driver’s license or other state-approved ID
- income information
- Employment history
- The property address
- Purchase price of the property
- Down payment amount
Since mortgage terms and rates can vary from one lender to another, you should contact several lenders to compare offers. This will help you find the best deal.
Note: You should request quotes from three to five lenders so that you know where you get the best interest rate and the lowest fees available to you.
However, lenders usually check your credit before providing rate information and issuing a pre-approval. But don’t worry too much about the impact on your credit score.
What is FHA loan requirements credit score
A credit score of 580 and above will require a minimum down payment of 3.5% for FHA loans.
If you can make a 10% down payment then your credit score can be in the range of 500 – 579. Rocket Mortgage® will require a minimum credit score of 580 for FHA loans.
How to Apply for FHA Home Loan application?
To apply for an FHA Home Loan application online, you can visit any mortgage website that provides the FHA home loan. example home loan site.
Step 1: First of all visit the official website site of https://www.rocketmortgage.com/
Step 2: Then choose your Home in the list, then click on the Next button.
Step 3: After that, select ‘Property Use’ and click on the Next Button.
Step 4: Select “Your Credit Profile or Score” which you have.
Step 5: Do you have a 2nd mortgage? – choose your option ‘yes’ or ‘no’.
Step 6: Enter your first name, last name, and email address and create your password and add some Required details. then submit your FHA loan application.