FHA Home Loans

What is a FHA home loan?

FHA home loans are insured by the Federal Housing Administration, an agency that is administered by the Department of Housing and Urban Development (also known as HUD). The FHA will protect your lender against losses in the event that you were to default on your mortgage.

Since FHA loans are insured, they typically carry looser approval requirements than other types of home loans, including lower downpayment requirements, lower minimum credit scores, and even allow for previous bankruptcy's or foreclosures from the past. FHA loans do require the home owner to pay a lump sum UFMI (Up Front Mortgage Insurance) premium and also requires monthly mortgage insurance for the entirity of the loan.

Due to the relaxed approval requirements FHA loans are very attractive for first-time home buyers or home buyers with current or previous credit challenges.

What are some of the benefits and requirements of a FHA Home Loan?

• The home must be appraised by an FHA-approved appraiser.
• An inspection must occur, and the inspection must detail whether the property meets FHA property condition guidelines.
• The home must be your primary residence and cannot be used as a rental / investment property.
• You must occupy the home within 60 days of closing.
• A minimum FICO credit score of 620 is required to qualify.
• The minimum downpayment required is 3.5% of the loan amount, and the buyer can use "gift funds" for the downpayment.
• For most FHA loans, your DTI Ratio (Debt-To-Income Ratio) needs to be lower than 43% but there are some scenarios where your DTI can go as high as 50%. Your DTI is a percentage that determines how much of your income is spent towards monthly debts. You can calculate your DTI by adding up the minimum monthly payments from your debts (Credit Cards, Student Loans, Car Loans) and dividing it by your gross monthly income.
• You will have to pay an upfront mortgage insurance premium of 1.75% of the loan amount, and monthly mortgage insurance to protect the lender from losses in the event that you default on your payments.

Our Closing Process

Step 1

Loan Application

The application process takes 10-20 minutes and can be completed over the phone or through our secure website. We would prefer the opportunity to take your application over the phone, completing the application over the phone allows us to collect more information surrounding the needs and wants of your new loan.

Step 2

Credit Check & Initial Disclosures

At this step we are going to pull your credit to verify that you can qualify for the loan. You will also receive your initial loan disclosures. These disclosures outline the type of home loan that you are applying for, repayment terms, your rights as a consumer, and our privacy policy.

Step 3

Supporting Documentation

Your loan officer will be requesting the minimum documents needed to verify the information submitted in the application and begin verifying your income, assets, and liabilities. This information is used to confirm your DTI (Debt To Income) ratio and establish your assets and cash reserves.

Step 4

Appraisal

The appraisal insures that the home you are purchasing is valued at the amount of money you are borrowing. If the home you are buying is under construction this appraisal will be based off the plans, and upgrades that you have selected. Upon completion of the home a "re-inspection" will be performed where the appraiser will verify that the home is completed.

Step 5

Underwriting

Your loan officer and their assistant has submitted your loan for review by an underwriter. The underwriter is going to conditionally approve the loan based on the loan requirements and guidelines to insure the home loan. At this point the underwriter will establish a list of conditions for your loan team to complete before the loan can be cleared to closed. The Loan Officer Assistant and the Loan Processor will work with you to collect additional documents to support the information that is needed to clear each of the underwriters "conditions".

Step 6

Approval

Upon satisfying all of the loan conditions your loan will change status from "conditionally approved" to "approved". The underwriter will hand your loan off to the closing department to begin the process of drafting closing documents and final disclosures for your review.

Step 7

Clear to Close

Your loan is now ready for closing. You will receive the closing disclosure which details the final terms of the loan, the payment, the loan closing costs and the pre-paid expenses tied to your home loan.

Step 8

Closing Day

You will attend the closing at the title company. At closing the title rep will present you with the final loan documents for you to sign. The entire process typically takes about 45 minutes to an hour and the title rep can explain or answer any questions you may have. Upon completion of signing these documents we will "release the wire" and the title company will give you the keys and disburse the funds to the seller and the Realtors involved in your transaction.