The Federal Housing Administration (FHA) offers mortgage insurance on loans that FHA-approved lenders provide throughout the United States. These lenders offer mortgage loans for both multifamily and single family homes, including hospitals and manufactured homes. FHA mortgages attract interest even from U.S. territories. Since the inception of FHA-HUD loans in 1934, FHA has insured and facilitated mortgage acquisition for over 34 million properties.
While providing lenders with protection against homeowners defaulting on these mortgage loans, FHA outlines the requirements you need to qualify for a mortgage or mortgage insurance. But whether you are a first-time borrower or a veteran, the loan process can be confusing and intimidating.
Where do you even begin, given this multi-step process?
1. Begin with a good budget
When considering an FHA mortgage, City Creek Mortgage recommends reviewing your financial situation. Look inward instead of outward and establish your housing budget. Review your recurring debts and add them up, then compare the debts to your monthly net income. This fairly simple math will help you determine the monthly figure you can use for a mortgage payment.
2. How is your credit situation?
Before starting the FHA loan process, review your credit situation–scores and reports. Credit reports basically indicate your spending history and capacity to borrow and repay loans over a given period of time. Credit scores are three-digit numerical grades based on information within your credit report. Lenders usually use the FICO score, which runs from 300 to 850.
Checking your monthly budget and maintaining credit reports that align will the requirements of FHA mortgages ensure that you enjoy a hassle-free application. Additionally, when planning for an FHA loan, consider saving more money to cover expenses that accompany the loan processing.