How to Apply for an FHA Home Loan

A recent survey we conducted showed that most buyers want to use an FHA home loan to purchase a house. These government-insured loans are particularly popular among first-time buyers. In this lesson, you’ll learn how to apply for an FHA loan the right way. We will cover everything from finding a lender to submitting your loan documents. Without further ado, let’s get right to it…

How to Apply for an FHA Mortgage Loan

Most lessons on how to apply for an FHA home loan start with the application form itself. But this is just one part of a much bigger picture. To better serve you, we would like to start at the beginning. It all starts with a bit of budgetary math on your part:

1. Establish your budget. Pop quiz … how much of a mortgage payment can you comfortably afford each month? If you don’t know, then you’re not ready to apply for an FHA loan. You need to have a monthly budget in mind (and on paper) before you start talking to lenders. This will prevent you from taking on a mortgage that’s too big for you. Believe it or not, it’s possible to be approved for a home loan that exceeds your housing budget. It happens all the time!
2. Check your credit. Most lessons on how to apply for an FHA loan skip over this topic. This is a disservice to readers, in my opinion. Your credit score is extremely important during the mortgage qualification process. Some new rules went into effect in 2010, regarding credit scores and FHA home loans. If you have a score of 580 or above, you could put as little as 3.5% down on the loan. If your score is below 580, you might have to make a down payment of 10%. In addition, a bad credit score can hurt your chances of qualifying for the loan altogether. Visit our credit center to learn more.
3. Round up your documents. When you apply for an FHA home loan, you will have to provide a number of financial documents. Gathering these documents now will save you some time and energy later on, when you submit your loan application. Start a folder for these documents. Gather your IRS tax returns and W-2 forms for the last two years. Write down all of the addresses where you’ve lived in the past. Include your pay stubs and bank statements for the last two months. You might need other documents to apply for an FHA loan, but this list is a good place to start.
4. Find an approved lender. If you want to use the FHA home loan program, you have to apply through a lender that has been approved by the Federal Housing Administration. You can search for these lenders by city and state on the Department of Housing and Urban Development (HUD) website. Just do a Google search for “FHA approved lenders” to find the find the exact page, or click here.
5. Submit your application. Once you’ve done all of the preliminary work listed above, you’re ready to submit your loan application. You might be able to start this process online, depending on which lender you use. You can also apply for an FHA loan on this page of our website. Just make sure you have a firm budget established, before you move forward (step #1 above).

I hope you found this mortgage lesson helpful. If you’d like to learn more about the home buying process, be sure to do a search at the top of this page. The search tool will give you access to more than 2,000 articles on various home-buying topics. Good luck.