FHA Home Loans

There's one major mistake that homebuyers can easily make when applying for an FHA home loan. It's making a major credit purchase just before or during the loan application process.

Don't cloud your debt-to-income ratio with a big purchase before closing on your home. Remember that your debt calculations are based on your current expenses and debts. Your lender will compare that to whatever income you're generating.

Any major credit purchase will seriously alter the balance you experienced historically. Sometimes it can be enough to tip the scales against you when it comes down to an FHA loan approval. For example, if you can afford to pay off your current auto loan or other revolving debt before applying for an FHA loan, it may be a good decision.

Before you pay down any of your large debts, think about your overall financial picture and how much cash you'll need for a down payment and other related expenses. In general, getting rid of any debt on your record will help when you apply for the FHA loan. As always, if you have any doubts at all, consult one of our First Choice loan officers.

The FHA will ask for a lot of information, which will go on your loan application. Be sure to ask your loan officer for a complete list of required data and give yourself plenty of time to gather the information. You will need to provide the FHA with a wide range of details. This includes your social security number, all the addresses where you have lived in the previous two years, your employer's names and addresses for the last two years, plus the amount of your gross monthly salary.

If you have had multiple jobs over the last twenty-four months, you will need to provide W2s for all of them. You will also need your income tax forms submitted for the last two years. If you don't have copies of your W2s, you should contact your employers for assistance. If you need replacement copies of your income tax returns, go to IRS website and follow the instructions on how to order replacements. A tax transcript is free of charge, and copies of actual tax returns cost thirty-nine dollars.

Additionally, you'll need to provide pertinent information for all checking and savings accounts, details about any open loans, a list of real estate you own, and the approximate value of all personal property. You'll also be required to pay for a credit report and appraisal of the property.