How to Get an FHA Loan
The Federal Housing Administration (FHA) offers a federally backed program that insures loans originated and serviced by qualified lenders. It was originated to help low-income and moderately low-income families buy homes of their own.
- Difficulty:
- Easy
Instructions
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1
Contact an FHA-approved lender. Look in the yellow pages under Real Estate Loans/Mortgages, or search the Internet.
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2
Shop around. Interest rates for FHA loans are set by the individual lenders, so rates vary.
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3
Learn the specific income and credit qualifications for your area.
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4
Know that the maximum loan amount is $151,725, but may be lower depending on where you live.
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5
Complete a loan application.
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6
Provide the documentation required by the lender.
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7
Be prepared to pay a down payment of 3 to 5 percent, depending on where you live. (Closing costs are 2 to 3 percent of the purchase price, and most of that can be financed.)
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8
Pay mortgage insurance. Because you may be putting down as little as 3 to 5 percent, you are required to pay mortgage insurance to cover the risk incurred by the lender. An up-front mortgage insurance premium is required and can be financed. The monthly mortgage insurance payments must be paid each month with the mortgage payment.
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9
Complete the loan transaction.
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1
Tips & Warnings
FHA loans are available for manufactured homes, single-family residences, multi-family units and some health-related facilities.
FHA loans have no prepayment penalty.
Program requirements and restrictions vary by county.
Loan origination fees charged by the lender for the administrative cost of processing the loan may not exceed 1 percent.
Most FHA loans are assumable to qualified purchasers.
Impound accounts (escrow accounts established to provide for the payment of certain bills) for property taxes and hazard insurance are required.
If the purchase price exceeds the maximum allowable loan amount for your area, you will have to pay the difference up front.
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Comments
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I have been in the mortgage business for 8+ years. I am very familliar with loan and mortgage process. If you have questions give me a call at 866-295-9339 x 777. Ryan Salo Bank Of England. FDIC, Equal Housing Lender.
