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Are you ready to start the application process for an FHA home loan? We aren’t talking here about pre-qualifying or pre-approval for a home loan, instead we’re talking about actually starting the home loan approval process.

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

Knowing When You Are Ready to Apply for an FHA Home Loan

April 11, 2022

Knowing When You Are Ready to Apply for an FHA Home Loan
Are you ready to start the application process for an FHA home loan? We aren’t talking here about pre-qualifying or pre-approval for a home loan, instead we’re talking about actually starting the home loan approval process.
 
  • To begin the loan approval process for an FHA home loan, you’ll need:
  • A seller and a home to make an offer on
  • The ability to make a down payment
  • Any required gift letters for down payment or closing cost assistance provided to you
  • Tax documents from the last two years
  • A complete understanding of what is in your credit report
When you make a serious offer on a home and it gets accepted, that is basically the beginning of your loan approval journey. This is a different and more involved process than for prequalifying for a mortgage.

Some experience confusion over this subject. It’s easy to assume a prequalification is the same thing as loan approval, but actual loan approval requires more detail. Never assume the loan is fully approved until your lender tells you it has been. Making the offer on the home brings you into a new phase of your home loan process.

And don’t forget that before you make an offer, you’ll want your credit to be as prepared as possible. What does your credit report tell the lender when you are ready to move forward? If you don’t know what your lender will see, you are not ready to make that offer.

Why? What happens if your loan officer sees things in your report including outdated information, identity theft, or inaccuracies in the report? These are issues that can affect any FHA loan application process.

You are in danger of having your loan delayed until those issues are resolved. Credit report disputes take time to process and complete. And you should expect to dispute the same information with each credit reporting agency (Equifax, Experian, TransUnion) individually. 

Review your credit reports regularly and try to start doing so as early in the home loan journey as possible.

And then there are down payment issues. If you are receiving gift funds for your down payment and/or closing costs, your lender requires a letter from the giver explaining the source of the money and showing the paper trail for it.

This is to prevent down payment funds from being obtained from cash advances, payday loans, or other non-approved sources. This is required for all down payment money, not just gift funds, so be prepared to show the lender where your funds come from, too.

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