FHA (Federal Housing Administration) loans are guaranteed loans with lenient rules to help people get their homeownership. An FHA loan is not given by a lender itself but it is a safeguard for banks and lenders so that they can grant loans for people with low credit scores. This is a loan partly guaranteed by the Department of Housing and Urban Development (HUD). How to apply for an FHA loan Just like any other lending institution, you need to submit the necessary information about your financial capability. Here are some of the things you need to prepare:
- Tax returns for the past two years
- Bank statements
- W-2 forms for the past two years
- Two latest pay stubs
- Proof of income – investments, earnings, and securities
- Profit and loss statements if self-employed
- Character reference – Names and contact details of employers for the past two years
- Social Security, Pension, Disability incomes whichever is applicable
- Debts and repayment schedule
Once your papers are ready, you can go to the bank personally and fill out forms and submit your FHA loan application to a loan officer who will review it. Another option, if your chosen lender has the capability, is applying online. Scan everything, including your forms and required documents, and submit electronically. Who is qualified to avail of an FHA loan Even if your credit limit is low, do not be discouraged because you can still apply for a loan that will allow you to get the house that you have been dreaming of. Being a homeowner is now possible because of an FHA loan. FHA loan lenders will have to look at your ability to pay. They will look at your gross monthly income and as a rule of thumb, your total debt repayments from your mortgage, car loans, credit cards, and the likes should not exceed 43%. But even if the numbers don’t add up, many FHA loan providers are willing to sit down with you and come up with a possible solution.
