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Borrowers should be prepared to come to the home loan process with no fewer than 12 consecutive months of on-time payments on all financial obligations. Lenders want to see patterns of responsible credit use and reliable payments.

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November 11, 2019
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FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA Loan Articles

News and Updates for Homeowners

When Should I Apply for an FHA Mortgage?

When Should I Apply for an FHA Mortgage?
July 3, 2019 - One of the most important things you can do to help yourself get closer to home loan approval is to carefully think about the timing of your mortgage loan application. When some people talk about this, they have interest rates in mind-hoping to take advantage of a downward trend in mortgage loan interest rates before they swing into higher territory once more.

Others think about the timing of a home loan application in terms of whether the home purchase is happening in a housing market trend toward lower prices-hoping to take advantage of a buyer’s market when prices are lower or when sellers are more eager to unload a property or certain property type.

But the kind of timing we are discussing here has a lot to do with the borrower’s preparedness to apply and be approved for a home loan. If you apply before you are ready, you risk loan approval.

How?

Borrowers should be prepared to come to the home loan process with no fewer than 12 consecutive months of on-time payments on all financial obligations. The lender wants to see patterns of responsible credit use, reliable payments, and the likelihood that those patterns will continue.

And for some borrowers, the timing issue also includes some other variables; those who have applied for home loans in the wake of a Chapter 7 or Chapter 13 bankruptcy, for example, have a minimum waiting period that must be met before a new loan application is possible. You may be required to wait one year or longer depending on the individual circumstances of such a negative credit event.

Additionally, those who have experienced a foreclosure also must wait out a mandatory time frame before they are allowed to apply for a new mortgage loan.

The timing of these waiting periods depends on several factors, including state law, lender requirements, and in some cases, court permission to enter into new financial commitments. (The court permission issue is associated with certain kinds of bankruptcy).

If you are ready to apply for a home loan and have done all the other crucial steps including lowering your credit card balances, cutting down your debt ratio, and saving up for the down payment, consider delaying your mortgage loan application until you have the minimum recommended 12 months of on-time payments accomplished.

Doing so can greatly improve your chances at home loan approval, but be sure to ask your chosen participating FHA lender what requirements from that financial institution may also apply. You’ll be glad you did.

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