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How Do I Get an FHA Mortgage?

The iServe Blog

When you’re buying your first home, the loan application process can seem very complicated. Among the many options you have to choose from are FHA home loans. But what is an FHA loan? How can you qualify for these loans, and what does it mean for your mortgage options? We know you have questions, so we’ve taken a few minutes to give you the basics as to how FHA home loans can be a real benefit when you’re buying a home.

What Is an FHA Loan?

One of the most common questions we get from new homebuyers is: What is an FHA loan? Though there’s a lot of information available about FHA home loans, it’s often contradictory. This is especially true when you’re looking at information that dates prior to 2008 when the housing market crash caused many new regulations to be put into place.

FHA home loans don’t actually come from the Federal Housing Administration; they’re simply insured by that agency to help homeowners who may have less-than-perfect credit or a short credit history purchase a home. This type of loan has a specific high-balance limit based on your location, fixed-rate or adjustable-rate programs, and has no pre-payment penalties if you’re conscientious and decide to pay your new home off early. Hopefully, now you know the definition of an FHA loan, but here are more details about applying for an FHA mortgage.

How Do I Get an FHA Mortgage?

There are some basic requirements for an FHA mortgage. You’ll need to come up with at least 3.5 percent of the purchase price as a down payment, but you can use gift funds for the down payment and closing costs, making it a great option for first-time homebuyers. The program can work with flexible debt ratios, but you’ll need a credit score of 600 or higher; though in some cases, people with a credit score of 580 or lower have been able to be approved for this type of mortgage.

Once those thresholds are met, you’ll start the loan process. Many new homebuyers find it helpful to be pre-qualified for an FHA loan, because it also gives them a top figure they can borrow. When you’ve found a home, you’ll fill out a standard home loan application, and the property is appraised. Once those steps are completed, your loan application and home information are sent to an underwriter who will review the information and verify that all the necessary documentation is in place. After that is complete and approved, you can be cleared to go through the closing process.

Getting ready to buy your first home can be an exciting time, but it can also be very stressful and confusing. Fortunately, iServe is here to make that process easier. If you have questions or need help, please feel free to contact us today. At iServe Residential Lending, we’re always happy to help you find your way home.