If we got "conditional approval"... what exactly does that mean?

Applied for FHA loan (first time buyer) & all of our application materials are in, appraisal is done, etc. I heard from our mortgage broker this week that we have "conditional approval" with the conditions being a) that I provide documentaiton of my student loans (I'm currently a grad student - working full time - so they're deferred but they need to know how much payments would be if I were paying them... I already gave the numbers to the broker but they need "official" letter from lender) and b) paying off old collections (which we knew we'd have to do from day 1 for the FHA loan & are doing so through escrow...)

So... does this mean I should start being a bit more optimistic and maybe start making moving plans or is there still time for things to go wrong???

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  • 1 decade ago
    Best Answer

    Conditional means that if everything you told them checks out officially and they have no surprises upon there investigating then you have the loan.

    You have to always show proof of everything that you claim (income, credit etc) they can't just take your word for it!

    Wait until they have all there documentation first before you start packing.

  • 3 years ago

    Conditional Loan Approval

  • 3 years ago

    Conditional Mortgage Approval

  • 1 decade ago

    There is always time for things to go wrong in the purchase of real estate. Even to the day of closing, but when you take care of your part the closing will usually happen.

    You just have to comply with the reasonable requests that the lender requires before the loan is approved. It is an involved process and has a lot of detail. After all, the lender is going to loan you, a stranger, a lot of money so you can buy the house. The lender wants to be sure that you are in a condition to repay the load as agreed and that you will repay the loan.

    Keep up with the process and what they ask of you such as paying off old collections should definitely be done. This is as helpful to you as it is to the lender. Good luck and enjoy your house!

    Source(s): FL real estate agent since 1998
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  • 1 decade ago

    Conditional approval means a couple of things. First, you do have to complete the items that you spoke of. Second, you cannot have any "material" changes in your financial status prior to closing. Don't go buy a car on credit, lose your job, get sued and lose a judgment in court, etc.

    If you do the first item, and don't do the second, the lender will give you the loan. It's as simple as that.

    Source(s): I'm a licensed Realtor in Colorado.
  • 4 years ago

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    RE:

    If we got "conditional approval"... what exactly does that mean?

    Applied for FHA loan (first time buyer) & all of our application materials are in, appraisal is done, etc. I heard from our mortgage broker this week that we have "conditional approval" with the conditions being a) that I provide documentaiton of my student loans (I'm currently a...

    Source(s): quot conditional approval quot mean: https://biturl.im/OVFkH
  • Anonymous
    1 decade ago

    Yes be optimistic. The underwriter has already calculated any future payments on the student loans. Once you remove the conditions or have complied with what has been requested, you will get a CTC (clear to close ) Only thing I can see that might be an impediment is the collection pay-offs. Underwriters often seek verification that those have been paid, before they issue a final.

  • Everyone above is correct, the final two conditions need to be met to have "final approval". Lender's have to protect themselves until all documentation has been collected, therefore they always use the "conditional" label. Good Luck!

  • 1 decade ago

    Basically Othinel answered your question in detail.

    I'm also a first time home buyer in the beginning stages and I am now comparing lending rates with at least 3 lenders! I need to compare rates so that I can negotiate those junk fees!

    Good luck and remember to hope for the best but prepare for the worst.

  • 1 decade ago

    Basically, you have the loan if you prove that everything you told them is true.

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