Things You Need to Know Before Completing Your FHA Loan Application
The goal of the FHA is to encourage more lenders to give out loans to atypical homebuyers. FHA backed loans allow legal citizens to buy properties. Applicants who finance through the FHA characteristically have less than ideal credit, or difficulty in establishing credit. By reducing the risk of financial loss if a mortgagor becomes non-complaint, these loans guarantee that financiers who give out the loan will get their money back. An FHA mortgage Loan calculator is a useful tool to determine what kind of monthly payments a certain loan will require. This can give you an idea of whether or not financing a new home through an FHA loan is a good idea.
FHA Mortgage Loan Calculator
Many first-time home buyers file the FHA loan application for first time home purchases. One advantage that these loans offer is a lower down payment when initially buying the property. Many potential home buyers find that they can qualify for a mortgage by completing an FHA loan application. Having approval on an FHA loan application can help by reducing your down payment and lowering your interest rate. Try using an FHA mortgage loan calculator to estimate your costs.
It is important to know exactly what you can afford each month as your monthly loan payment. Using the FHA mortgage loan calculator, a potential buyer can determine how expensive the monthly payments would be, and how this expense fits into your overall budget. FHA mortgage loan calculator tools can provide potential buyers with estimates on the cost of property taxes and home owner’s insurance. By using this tool, the potential home owner can get a realistic perspective on what financing a new house really costs. Do not underestimate the cost of these loans, as you may be paying the monthly bill for numerous years.
Credit scores that are 580 or higher are key to funding your dream home. Potential homeowners that qualify on their FHA loan application can close on a house with a low-down payment. If your credit score is lower, you are still able to get approval for your FHA loan application. Credit scores between 500 – 579 typically close with a higher down payment. Those with lower credit scores will likely end up with higher interest rates on their FHA home loan.
FHA Loan Application
Approval on your FHA loan application depends on several factors. Using an FHA mortgage loan calculator takes these considerations into account, providing recommendations for homes that fit your price range and payment needs. Knowing what you qualify for is the first step to becoming a homeowner.
When completing an FHA loan application, the borrower must be a lawful citizen with a valid social security number and reside in the United States. When submitting your FHA loan application, you need to be of the legal age set forth within the guidelines of your residing state.
To qualify on your FHA loan application, as a borrower you also need to prove your work history. FHA guidelines require you to have a steady work history of at least 2 years, or to have been continuously working under the same employer.
Without exception, every FHA loan application applicant must pay the minimum down payment set forth by their mortgage agreement. An FHA mortgage loan calculator can help establish an estimate for this initial expense.
When purchasing a home through the FHA, the occupancy clause mandates that the borrower be the primary resident for the property. This doesn’t mean that you can’t leave, but you are held legally responsible for all property events.
Before you can purchase a house through the FHA, the borrower needs to have the property appraised. These must be performed by an FHA-approved appraiser.
When submitting your FHA loan application, you need to prove that you have the necessary income to pay your mortgage. This is called the front-end-ratio. This number must be lower compared to your total gross income by a certain percentage. You can determine how much your payment would be by taking advantage of the FHA mortgage loan calculator.
Getting your FHA loan application approved doesn’t always require a minimum credit score. However, for maximum financing options, you need to have a credit score of at least 580. If your score is low you may still get approval on your FHA loan application, but these loans will typically cost more overall. FHA-qualified lenders need to use discretion when reviewing the financial merit of FHA loan candidates.
Having a good financial plan is key to getting your FHA loan application accepted. Using an FHA loan calculator can help determine what amount of your income that will go towards your monthly payment. However, even if you have filed for bankruptcy in the past, you can still get approval on your FHA loan application. Two years need to have passed since filing, and efforts to improve personal credit must have been shown. Exceptions can be made on the basis that the applicant experienced unforeseeable financial turmoil that was out of their control. Approval on the FHA loan application after foreclosure is also possible. Three years must have passed since the foreclosure, and credit needs to be re-established. As you can see, the FHA loan is a forgiving financial option and takes past financial hardship into account.
To qualify on your FHA loan application, the home purchase must meet specific standards set forth during the home inspection process. If your home does not meet these strict standards, you risk having your FHA loan application denied. Some issues can be readily fixed. A seller is able to make these repairs prior to selling, but many times they will not. As a buyer, it is your responsibility to address the concerns made during the home inspection process. If the seller refuses to address the issues, you have the option to pay for the repairs yourself. Money used for the repairs will be put in escrow until the repairs are completed.
