How to get pre approved for a home loan first time buyer

Q: How quickly can I get preapproved?

Once youve submitted all your information to the lender, you can expect to receive your loan estimate within 3 business days, though this may be much shorter if you use an online mortgage lender. The loan estimate will let you know whether youve been preapproved and for how much.

2022 FHA LOAN LIMITS

FHA LOANREQUIREMENTS

REFINANCELOANS

HOMEBUYERGRANTS

CREDITSCORES

MORTGAGECALCULATORS

FHA.com is a privately owned website, is not a government agency, and does not make loans.

Choose a Loan Type

FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA Requirements

Your Credit Scores

FHA Loan Calculators

FHA Refinance Loans

FHA One-Time Close

More FHA Programs

FHA News Blog

Getting Started Before You Find a Home

FHA home loans were designed to help Americans fulfill their dream of homeownership and are therefore the easiest type of real estate mortgage loan to for which you can qualify. Among the home loan options available that require a minimal down payment, FHA loans are the most popular. In fact, the FHA loan is the most flexible type of home mortgage loan available.

THE ESSENTIALS

Steady employment history, at least two years with the same employer.
Consistent or increasing income over the past two years.
Credit report should be in good standing with less than two thirty day late payments in the past two years.
Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.
Any foreclosure must be at least three years old with good credit for the past three years.
Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.
If you can answer YES to these statements you should have no problem qualifying for an FHA home mortgage loan.

While prequalifying for a loan doesn't necessarily guarantee that you will be able to purchase the home of your dreams, it does help you and potential lenders know your borrowing power and what you can afford in terms of a monthly mortgage payment. Prequalifying for a loan simply means that you have taken an inventory of your income and assets and submitted them to your potential lender. Based on that information you should be able to qualify for a home mortgage loan.

FHA Loan Programs

SEE YOUR CREDIT SCORES From All 3 Bureaus

Do you know what's on your credit report?

Learn what your score means.

FHA Loan Articles and Mortgage News

FHA Loans and Owner Occupancy

October 18, 2022 - There are often questions potential borrowers have regarding FHA loan requirements for occupancy. Some borrowers may wish to purchase an FHA financed home with the idea they will become landlords of that property. FHA regulations for single family homes do not allow this.

Is it Smart to Buy a Home Right Now?

October 17, 2022 - A recent report by NPR notes that house prices in general have gone up by as much as 40% in two years, depending on which sources you use for the data. Combined with rising mortgage rates, some are left wondering whether it’s a good idea at all to consider a new home.

Why FHA One-Time Close Construction Loans Are Different

October 16, 2022 - FHA Construction loans are unique compared to other FHA loans used to buy existing homes. These loans are comparatively simpler, less costly than building your own home, and in many cases you can move into the house once you have hit closing day and get the keys.

How FHA Rehabilitation Loans Work: The Draw Process

October 16, 2022 - There are different FHA loans for different purposes. You don’t apply for an FHA condo loan, for example, when you want to purchase a house in the suburbs. You probably would not apply for a loan to buy a home in the suburbs when you want to buy a fixer-upper.

Why Choose an FHA Adjustable Rate Mortgage?

October 15, 2022 - An FHA Adjustable Rate Mortgage could help you get into a more competitive interest rate, but if you don’t have a long-term plan and a goal for the mortgage, or you just want your home loan to be as uncomplicated as possible, an ARM might not be for you.

You have decided to buy a house, but don't have enough money to make the purchase. Your situation isn't unique, few people have enough cash on hand to buy a home. However, banks and mortgage companies offer loans, called mortgages, which provide people with the difference between what they have saved and the price of the home they wish to purchase.

While many people find the home they want and then look for a mortgage, it's a good idea to look at your mortgage options first. It's important to know how much you'll be able to borrow before you find a house.

Check your credit score

The first place to start is reviewing your credit report and getting your credit score. Check with your bank or your credit card companies as they'll often provide these for free. And each of the three national credit rating agencies, Equifax, Experian, and TransUnion are required to provide you with one free credit report per year.

You can request a report by going to annualcreditreport.com, or by calling the credit reporting agencies. If you're planning to purchase the home with your spouse or another person, they need to request and review their credit reports as well. Review your credit reports for any incorrect information and, if you find any, contact the credit reporting agency to request a correction.

Check your credit score, which is a number between 300 and 850. A higher score not only improves your chances of getting a mortgage loan, but may also help you qualify for a lower interest rate.

Don't wait until you have found the home you want before looking for a mortgage. This will give you time to improve your credit score by reviewing your credit report for accuracy, paying your bills on time, and reducing your balances on your credit accounts.

Know your debt-to-income ratio

All of your monthly payments toward your existing and future debts should usually be less than 43% of your monthly income. However, the amount you qualify for based on this calculation may not be suitable for you. You should review your personal situation and work with a financial advisor to decide how much you can comfortably afford. We'll verify your income during the application process. To calculate your debt-to-income ratio, divide your monthly payments by your monthly gross income.

Use this formula to get an idea of your debt-to-income ratio: A/B = debt-to-income ratio:
A= Your total monthly payments (such as credit cards, student loans, car loans or leases; also include an estimated mortgage payment).
B= Your average monthly gross income (divide your annual salary by 12).
For example, if your monthly income is $5,000 and your monthly debts and future expenses are $1,000, your debt-to-income ratio would be 20%.

If your debt-to-income ratio is more than 43%, you still may be eligible for a mortgage if another person (such as a spouse, relative or someone who lives in the home) completes the application with you. We'll ask you for the co-applicant's information during the application process.

Starting the process early might give you time to pay off some credit card balances or smaller loans, which can reduce your debt-to-income ratio and possibly improve your credit score.

Your down payment

Putting a higher amount of money down may lower your interest rate and build equity in your home quicker. If your down payment on a conventional loan is less than 20%, you must pay private mortgage insurance (PMI), which covers the lender if you stop paying your mortgage and default on your loan. The yearly cost of PMI is about 1% of your outstanding loan balance and is added to your monthly mortgage payment. You can request to have PMI eliminated once your outstanding balance reaches 80% of the original loan amount.

Some loan types may require less of a down payment, such as only a 3% to 5%. Federal Housing Administration (FHA) loans require a 3.5% down payment, while the U.S. Department of Veterans Affairs (VA) loans may not require any money down.

Going to a lender to get pre-qualified

Once you feel you're ready to buy a house, getting the right mortgage is the next important decision you'll make. To be sure you're getting the best deal, talk with multiple lenders and compare their mortgage interest rates and loan options see types of mortgages.

With pre-qualification, the loan officer will ask for information about your income, job, monthly bills, amount you have available for a down payment, and possibly some other information. They will then provide you with an estimate.

Finalizing your mortgage

Once the seller has accepted your offer, you can move forward with completing the mortgage process and taking possession of your new home. The first step is to decide which lender you want to use and the type of mortgage that's best suited for you.

With a fixed-rate mortgage you'll always know what your monthly principal and interest payments will be. Fixed-rate mortgages offer 10–, 15–, 20–, 25– or 30–year terms. An adjustable-rate mortgage (ARM) can offer lower early payments than a fixed–rate mortgage. An ARM offers a 30–year term with a fixed interest rate for 5, 7 or 10 years (based on the chosen product), and becomes variable for the remaining loan term, adjusting every year thereafter.

You can save in interest over the life of your loan by choosing a 15-year term over a 30-year term. Your monthly payment, though, will be higher.

Your lender will order an appraisal to determine if the purchase price of the home is comparable to similar homes in the area. The appraiser will examine the house and then compare it to similar homes that have recently sold nearby. While waiting for closing, it is essential that you don't do anything that changes your financial situation, such as applying for new credit, changing jobs, or getting behind on your current credit payments.

Once your mortgage loan is approved, your lender will set a closing date.

Three business days before closing you'll receive a Closing Disclosure. This document itemizes all of the funds and costs paid by the buyer and seller either at or before closing. This document will show the loan amount, interest rate, loan term, origination fees, title insurance, deposits for property insurance and taxes, homeowners insurance and any other fees. Review the Closing Disclosure carefully and compare it to the Loan Estimate you received to make sure there are no surprises.

You'll receive a Final Closing Disclosure during your closing. This is the final version of the document you received 3 business days before closing. Check for any last minute changes.

The most common closing fees are:

Appraisal fee—For the estimate of your home’s market value
Attorney fees—For any legal representation to prepare and record documents
Inspection fee—For examining for structural problems; also for termites, lead paint in older homes and your roof
Origination fee—For processing and administering your loan
Underwriting fee—For reviewing your mortgage application
Title fees—For the search to verify there are no tax liens on the property and for insurance to protect you if a problem is discovered

Deciding to buy a home is a significant investment and not one to be taken lightly. Taking time to understand how to put yourself if the best financial position for pre-qualification and approval is an essential first step. Let us help make the buying process easier, allowing you to enjoy the home buying experience.

How far in advance should I get pre

The best time to get pre-approved for a mortgage is at least one year before you decide to purchase. As a home buyer, pre-approvals are for your benefit, so it's never too early to get one. Getting pre-approved early is an advantage because one-third of mortgage applications contain an error.

Which loan is best for first time home buyers?

An FHA loan has lower down payment requirements and is easier to qualify for than a conventional loan. FHA loans are excellent for first-time homebuyers because, in addition to lower up-front loan costs and less stringent credit requirements, you can make a down payment as low as 3.5%.

What are the 3 steps to get pre

How to get preapproved for a mortgage.

Step 1: Complete a home loan application. To get preapproved, you need to fill out a mortgage loan application. ... .

Step 2: Document your income and assets. ... .

Step 3: Your mortgage lender completes the pre-approval..

How quickly can I get preapproved?

Once you've submitted all your information to the lender, you can expect to receive your loan estimate within 3 business days, though this may be much shorter if you use an online mortgage lender. The loan estimate will let you know whether you've been preapproved and for how much.