How to Get an FHA Loan

Jim TrummJan 22, 2018

You've heard about FHA loans. You've read some articles about them. You've scrounged and scrimped and saved up for a down payment. And now you're ready to take the plunge. How do you actually go about getting one of these mortgages?

Step 1 — "Learn, Baby, Learn!"

One of the best ways to get your questions answered about FHA loans without going through a mortgage broker is to go directly to the source—that is, to the Department of Housing and Urban Development (HUD), which runs the FHA loan program. HUD offers free workshops on FHA loans and other homebuying topics all over the country. Call 800-569-4287, where you will be prompted to enter your zip code. An automated system will then read out a list of workshops in your area.

Step 2 — "Your Papers, Please!"

Although every mortgage involves paperwork, FHA loans are especially paperwork-intensive. If you're one of those super-organized people who has a file for everything and everything in its proper file, this step will be easy. If you're like the rest of us, though, you might need some time to assemble all your documents.

If you're a first-time homebuyer, at a minimum you will need to have these documents and bits of information:

  • last two years of W-2 forms, 1099 statements, and tax returns (self-employed people will need three years of tax returns plus year-to-date profit and loss statements)
  • most recent month of pay stubs
  • addresses where you've lived for the last two years
  • names and addresses of your employers for the last two years, plus the amount of your gross monthly wages or salary
  • most recent statements of all credit accounts
  • ID documents (e.g., a driver's license, state ID card; some banks may also ask for a Social Security card, even though this is not technically required)
  • decrees of discharge of debts in bankruptcy (if applicable)
  • people with no credit histories will be asked for their current utility bills

If you're a homeowner and are refinancing or purchasing another property, you'll also be asked to produce the mortgage and the deed pertaining to your current property, your property tax bill, a statement from your current mortgage, and your homeowners insurance policy.

Step 3 — "Pleased to Meet You, Hope You Guess My Name"

With papers and information in hand, your next step is to get together with an FHA-approved mortgage broker. Not all bankers or mortgage brokers have this federal approval. To find approved lenders in your area, consult the FHA Lender Finder  or contact one of our Top Ten FHA Loan companies.

Step 4 — "I Could Write a Book"

Now that you are ready to apply for your loan, it's time to fill out the FHA loan paperwork. And be forewarned: this is a paperwork-intensive process. If you run into something you don't understand, don't guess. And of course, don't write anything that isn't true. Lying on a HUD application is a federal offense. If you have questions about filling out the form, check with your mortgage broker or call the HUD helpline at 800-569-4287.

When you've completed all these steps, the remainder of the process is largely out of your hands. The house will be scheduled for an inspection and appraisal to determine whether the property meets HUD's health and safety standards and whether the asking price for the property is in line with prevailing prices in your community.

After you've been OK'd for an FHA loan, you'll probably be required to buy homeowners insurance. This is something separate and distinct from the mortgage insurance the loan itself requires. Check out our Top Ten Mortgage Companies  for some of the best and most affordable homeowners policies around.

And be sure to invite us to the housewarming!