How To Get An FHA First Time Homebuyer Loan
If you’re looking to buy a home but struggling to come up with a large down payment, an FHA loan may be the solution you…
Keep readingThe right mortgage can bring you home.
Take the first step in finding the right home loan for you.
The Mortgage Process
Applying for a home loan can feel scary. That being said, the better you understand what to expect in the mortgage process the more confident you will feel in your home purchase.
There are 6 basic steps to the mortgage approval process. Pre-approval, house hunting and writing offers, loan application, mortgage processing, underwriting and approval, and closing.
One of the biggest mistakes that first-time homebuyers make is waiting to speak with an expert about their personal situation.
Understanding the Mortgage Application
When filling out a mortgage application, homebuyers can expect to provide a range of information to lenders. The application process typically involves detailed questions about personal and financial circumstances. The application includes information such as job history, income verification, bank statements, tax returns, credit history, and details about any debts or liabilities. Being prepared with accurate and complete information can help streamline the application process and increase the chances of a successful mortgage approval.
Prepare Your Paperwork
Expect that when applying for a home loan, you will be required to provide various financial documents and information to lenders or mortgage providers. These documents help assess your financial stability and determine your eligibility for a home loan. Here are some common documents that you may need to provide:
- Pay stubs from the past few months
- W-2 forms or tax returns from the previous two years
- If self-employed, profit and loss statements and tax returns for the business
- IDs (for example driver’s license, passport)
- Bank statements from the past few months
- Investment account statements
- Retirement account statements
- Verification of employment from your current employer
- Previous employment history, if applicable
Typical Mortgage Timelines
It is important to understand the timelines associated with getting your loan. Here’s what the mortgage timeline usually involves, keeping in mind that delays can arise from factors outside of your control:
- Planning for mortgage approval is four weeks.
- Finding a property and making an offer is four to eight weeks.
- Applying for a mortgage is one week.
- Mortgage underwriting is four weeks.
- Closing on the property is one week.
“How much will my monthly mortgage payment be?”
EVERY HOMEBUYER EVER
Savvy Mortgage Calculator
Using an online mortgage calculator can help you estimate what your monthly loan payments will look like.
Types of Mortgage Loans
It is important to know that there are various types of home loans to choose from, each with its own features and benefits. When comparing mortgages, consider factors such as interest rates, loan terms, down payment, and closing costs. If you are curious about which loan best fits your personal situation complete our Buyer Power Approval™ and we will connect you to your personal mortgage professional to review your situation.
Conventional Loan
The conventional loan remains the most popular home loan option among home buyers. Fannie Mae and Freddie Mac set the lending rules for conventional loans. Homebuyers with scores as low as 620 may qualify for 3% down payment financing.
FHA Loan
First-time home buyers with credit scores below 620 may find it more cost-effective to use a loan backed by the Federal Housing Administration (FHA). With the FHA Loan, homebuyers may qualify with only a 3.5% down payment and a 580 credit score. FHA Loan limits do apply.
VA Home Loan
Your military service may make you eligible for a no-down payment VA Home Loan backed by the U.S. Department of Veterans Affairs (VA). The VA Loan often has lower interest rates and lower monthly payments because it does not require monthly mortgage insurance. There is no minimum credit score for the VA Loan.
How To Qualify For A Mortgage
Mortgage lenders assess four factors – down payment, credit score, income, and debt-to-income ratio – to determine the amount they are willing to lend you. They view your down payment as a sign of your commitment and financial ability and your credit score shows your creditworthiness. Lenders look at your income to ensure you have enough to repay the loan. They consider your debt-to-income ratio to gauge your ability to manage monthly loan payments alongside other bills.
commonly asked questions
How long will it take to pre-qualify for a mortgage?
A mortgage pre-qualification letter can be provided on the same day if the borrower submits their application and needed documentation. This letter will give you the ability to see homes with a licensed professional.
How does my credit score impact my ability to get a mortgage?
Your credit score plays a big role in the home loan amount that you approved. The higher your credit score, the better your chances you have of approval and securing favorable mortgage rates.
What documents will a lender require from me to approve my home loan?
Some of the most common documents include proof of income, tax returns, bank statements, and employment verification. It’s important to have these documents ready and organized to streamline the application process and help ensure timely approval.
How does my employment history impact my mortgage application?
Lenders often require borrowers to show a history of consistent employment or exhibit at least two years of experience in the same field or industry.
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