Do you get pre-approved for an FHA loan, the way you do with a standard 30 year fixed?
I've heard that you need to have a purchase contract first before the FHA loan will be approved. Is this correct?
- loanmasteroneLv 71 decade agoBest Answer
FHA does not make loans. They simply underwrite and guarantee the mortgage that is issued by a conventional lending institution.
In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.
Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.
He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.
The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.
When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.
#1 One month of pay stubs for each person that will be on the mortgage.
#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.
#3 Two years of federal income tax along with the W-2 that match.
Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.
Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.
Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.
If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.
You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.
Make sure your mortgage broker explain all your options so you may make an intelligent decision.
What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.
So select the best option for you and your financial situation.
You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.
Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.
Your mortgage broker will now order an appraisal to show proof of the property value.
The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.
After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.
Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.
I hope this has been of some use to you, good luck
- MinPinsLv 41 decade ago
Yes, FHA is not really a lending institution. The banks or mortgage companies will use FHA Standards to see what you qualify for. FHA standards are usually easier that conventional loans, your income to debt ratio is not as strict and your credit score does not need to be flawless. Also, you only need 3 (maybe 3.5% now) as a down payment. You really need to have a "purchase contract" before any loan gets approved but you will get a document from your bank called a "good faith estimate". Good luck in house hunting, it is kind of fun, especially if you know how much your bank is willing to loan you.
- David ZLv 71 decade ago
You should go thru same pre approval process for FHA as a conventional loan. Your lender should issue a pre approval letter that you can submit with any offer you make to a buyer.
- Beverly SLv 71 decade ago
You can get pre-qualified without a contract but no type of loan is pre-approved without a contract since the home has to be appraised/inspected etc before the final approval can be given.Source(s): 23 years mortgage business. I do FHA and all other types of loans.
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- Georganna VLv 51 decade ago
Yes, a loan will not be "approved" until the lender knows exactly what house you intend to buy, and that your offer has been accepted.
There are different processes to different kinds of loans. Usually, you pre-qualify with a realtor before you start looking at houses, that way you know what your looking at as far as price range you can afford, type of mortgage you will need/want to apply for. Some people do get pre-qualified because it makes their search easier, they know exactly how much a lender will lend, so there are not surprises or let downs by not being able to afford that one house you really want.
- hoverLv 43 years ago
2 issues: a million) The lender will loan you as much as $one hundred fifty,000. in case you decide on a house it somewhat is $one hundred ten,000 then they're going to loan $one hundred ten,000 2) you're becoming to be advancements/additions extra to the homestead. We have been approved for greater beneficial than the cost of a house, so we had home equipment and a hearth put in. This is going into and will enhance the loan quantity.