FHA Mortgage Lenders: What Matters To Them The Most?

Top FHA Mortgage Institution:

It’s normal for one to have butterflies in their stomach when they’re about to apply for a home loan. Buying a house, especially for the first time, can be rewarding, scary, exciting, and stressful all at the same time. And why wouldn’t it be? Your house is exactly where you make most of your memories. From cooking to Thanksgiving dinners, your home is an extension of who you are.

That said, it is only but right for you to choose a house wisely. And in doing so, choose a loan with it as well. One that best fits your situation and income capacity. Once you have all those covered, your next agenda is to make sure you meet the standards and qualifications that matter most to

FHA mortgage lenders.

So what exactly are they? What do these FHA-approved lenders look for?

Firstly, they rely heavily on your FICO score. A FICO score can range from 300 being the lowest to 850 being the highest. The base consideration for an FHA loan grant is 500. Anyone who scores 500 to 579 can be extended a loan with a 10% down payment requirement. A borrower whose FICO score hits the 580 mark or higher can be extended a loan with only a 3.5% down payment requirement.

It is safe to say that your FICO credit score will determine how much you will need to fork out as a deposit. If you still don’t know what your credit rating is, check your credit report. You may obtain these from the top U.S. credit reporting bureaus, namely: TransUnion, Equifax, and Experian.

Secondly, financial institutions take a look at your income situation. How is your wage-to-bills ratio? A rule of thumb in the real estate industry is to make sure that your estimated monthly mortgage payment, on top of all of your existing utility bills, do not exceed one-third of your income. This is put in place to make sure that a borrower is still able to live comfortably despite paying off debt. This is also to make sure that no one is put in a dangerous financial position in the long run.

If a borrower has existing loans, this will also be stacked against how much you earn. A misconception people have is that banks rely 100% on how much you earn or how massive your income is. And while that is not entirely untrue, what matters more to these lenders is how much of your take-home pay can you still keep for your self. Once existing loans, regular monthly bills, and future house taxes get in the way, will you still have enough cash to keep you going?

Thirdly, lenders and financial institutions also look at how much savings you’re ready to spend on a down payment.

So many people automatically just think of how much money they’re able to get in loans. Oppositely, it is best to ask yourself this question in reverse: how much am I able to give these lenders in the name of home equity? How much money do I have available for closing costs and a down payment?

best fha loan programs

Documentation is also very elemental in the whole loan process. These are the following paperwork requirements:

  • Address to your place of residence (past two years)
  • Social Security numbers
  • Names and location of your employers (past two years)
  • Gross monthly salary at your current job(s)
  • Pertinent information for all checking and savings accounts
  • Pertinent information for all open loans
  • Complete information for other real estates you own
  • Approximate value of all personal property
  • Certificate of Eligibility and DD-214 (for veterans only)
  • Current check stubs and your W-2 forms (past two years)
  • Personal tax returns (past two years), current income statement and business balance sheet for self-employed individuals  

Securing these will definitely make things easier for you. It is essential for a borrower to try to complete his or her requirements first even before reaching out to an FHA-approved lender. How many of these requirements do you already have and how many are you still yet to obtain?

It’s best for one to write all of them down and have a clear checklist with time frames besides each document to keep track of how soon you can complete each one.

Let us help you find out what the best FHA loan programs are.

What matters more to these lenders is how much of your take-home pay can you still keep for yourself. Once existing loans, regular monthly bills, and future house taxes get in the way, will you still have enough cash to keep you going?

Thirdly, lenders and financial institutions also look at how much savings you’re ready to spend on a down payment. So many people automatically just think of how much money they’re able to get in loans. Oppositely, it is best to ask yourself this question in reverse: how much am I able to give these lenders in the name of home equity? How much money do I have available for closing costs and a down payment?

It’s best for one to write all of them down and have a clear checklist with time frames besides each document to keep track of how soon you can complete each one.

Let us help you find out what the best FHA loan programs are.

by Rose