Buying a Home using a FHA Loan

The FHA loan program was created to help increase homeownership. The FHA program makes buying a home easier and less expensive than other types of real estate mortgage home loan programs. Some highlights of the FHA loan program are:

• • Minimal Down Payment and Closing Costs.
  • • Down payment of 3.5% of the Sales Price.
  • • Gift for down payment and closing costs allowed from a family member.
  • • No reserves or required.
  • • FHA regulated closing costs.
  • • Seller can credit up to 6% of sales price towards buyers costs.
• • Easier Credit Qualifying Guidelines such as:
  • • Minimum FICO credit score of as low as 580.
  • • Home purchase two years after a Bankruptcy.
  • • Home purchase three years after a Foreclosure.
• • Easier Debt Ratio & Job Requirement Guidelines such as:
  • • Higher Debt Ratio’s than other home loan programs.
  • • Less than two years on the job is allowed.
  • • Self-Employed individuals o.k.

These advantages of the FHA loan program has made it one of the best options for most first time home buyers as well as move-up home buyers.

You do not have to be a first time buyer to obtain a FHA loan. Any home buyer may use a FHA loan as long as you do not have more than one FHA insured loan at any one time.

Qualifying Summary

FHA guidelines for loan qualification are the most flexible mortgage loans that require less than 5% down payment today.

• • Two Years of steady employment, preferably with same employer.
• • Last two years Income should be the same or increasing.
• • Bankruptcy’s must be at least two years old, with perfect credit since discharge.
• • Foreclosure’s must be at least three years old, with perfect credit since.
• • Your new mortgage payment should be approximately 30% of your gross (before taxes) income.

Documents Needed for FHA Loan

The most important thing to understand is that the loan approval process is 100% dependant on your documentation.

• Employment Information
  • • Most recent two years complete tax returns with all schedules.
  • • Most recent two years W-2’s, 1099’s, etc.
  • • Most recent pay stubs covering one month period.
  • • If Applicable: Self-Employed will need Three years Tax Returns and YTD Profit & Loss Statement.
• Savings Information
  • • Most recent two months complete bank statements for any and all accounts with all pages.
  • • Most recent statement from retirement, 401k, mutual funds, money market, stocks, etc.
• Credit Information
  • • Most recent statements from your bills, indicating minimum payments and account numbers.
  • • Name, Address, and Phone number of your landlord, or 12 months cancelled rent checks.
  • • If Applicable: Should you have no credit. Copies of your most recent electricity statement, car insurance and phone bills will be needed.
  • • If Applicable: Copy of complete Bankruptcy and Discharge Papers.
  • • If Applicable: If you co-signed for a mortgage, car, credit card, etc, need 12 months cancelled checks, front and rear, indicating you are not making payments.
• Personal Information
  • • Copy of Drivers License.
  • • Copy of Social Security Card.
  • • If Applicable: Copy of complete Divorce, Palimony, Alimony Papers.
  • • If Applicable: Copy of Green Card or Work Permit.
  • • If Applicable: If you own another home(s) - see below
• If a Refinance or you own Rental Property
  • • Copy of Note & Deed from current loan.
  • • Copy of Property Tax Bill.
  • • Copy of Hazard (homeowners) Insurance Policy.
  • • Copy of Payment Coupon for current Mortgage.
  • • If Applicable: If property is multi-unit, need Rental Agreements.

Additional documents may be needed upon review of your file and on a case-by-case scenario.

FHA Loan Processing

The loan processing of your file is the most time consuming aspect of the loan process. This is the preparation of your file for presentation to the FHA investors. All documentation is reviewed to insure that there is no discrepancies in presentation and any possible issues are worked on at this stage.

If at your initial application you did not provide all of the original documents needed, this is the stage where they will be requested for again.

The processing stage is comprised of gathering all of the following documents.

• • FHA Case Number - We will request from FHA a FHA case number. If it is a condo, PUD or town home, we will need to verify that the property is a FHA approved complex. If property was previously in escrow, may need to request case number from other lender. Usually 1-3 days.
• • Verifications of Employment - Form sent to past and present employers for last two years to verify income and time on the job (some employers have an automated 900 # for employment verification). Unusually takes 5-7 days.
• • Verifications of Deposit - Form sent to banking institutions to verify average bank account balances for past 3 months (some banks will charge borrower a fee of up to $20 for this verification). Usually takes 5-7 days.
• • Preliminary Title Reports - This comes from the title company who will insure the title of the home. They research the property and borrower for any legal items, liens, loans that may affect title to the property. Usually takes 3-7 days.
• • Appraisal - Appraisal will be order from a FHA approved appraiser. The appraiser will go to the property, measure square footage, verify FHA required conditions, check other recent comparable home sales, and determine value of the home. Appraisals usually take 5-7 days to complete.
• • Purchase Contract, Counter Offers, and Transfer Disclosure statements - purchase transactions only. We need the executed contract, signed by both parties, prior to ordering the appraisal. This will typically be provided by the realtors. Usually takes 2-3 days.
• • Letters of Explanation - Letters written and signed by borrower to explain any issues on the credit report, work history, bank account deposits or variances, source of funds, etc. Usually complete after receipt of all other documents.
• • Additional supporting documents - Additional paperwork possibly needed on a case by case scenario, such as: 12 months cancelled checks to verify not making payments or receiving income, complete bankruptcy, divorce, child support papers. This will vary by borrower’s individual scenario.

Since we are requesting and receiving all of these documents from various companies and individuals, this is most often where there are delays. This portion of the loan process will normally take 1 to 3 weeks. Once the we have received all requested documents from all parties, your loan can be submitted to underwriting.

Yes, You May Qualify for an FHA Loan!

FHA loans are great for buying AND refinancing! Eagle Nationwide Mortgage Company is a wholly owned subsidiary of Eagle National Bank, a federally chartered bank, is headquartered in Chadds Ford, Pennsylvania is an approved FHA lender and the FHA Streamline is one of our most popular loans, allowing more people to qualify under flexible guidelines. Our clients love the low fixed rates and security of a government-insured loan. To find out if an FHA loan is right for you, call (866) 376-9397 today!

Refinancing with an FHA loan

• • You can refinance up to 97.75% of your home’s value. Or make a smart financial move and get cash from your home to consolidate your high-interest debt to a low fixed rate. FHA cash-out refinance loans(excludes Texas Homestead properties) allow you to take out up to 85% of your home’s value.
• • If you are currently in an FHA loan, you could get a lower rate with FHA Streamline refinance. FHA Streamline offers a limited documentation option that could avoid an appraisal and has flexible credit requirements. If you’re in an FHA loan, call us now at (866) 376-9397 to find out if you qualify for an FHA Streamline refinance loan.
• • Our mortgage application and processing uses exclusive technology that cuts the headaches out of getting an FHA loan.

Congress has raised the loan limits for FHA loans across the country! For example, in San Francisco, the FHA loan limit went from $362,790 to $625,500. Higher loan limits mean lower rates for more people! Get in touch with us today: fill out the form on the top or call (866) 376-9297 to find out the current FHA loan limit in your county. Don’t wait until it’s too late!

*Consult your tax advisor

Why Should You Choose Eagle Nationwide Mortgage Company?

When it comes to your finances, something as important as your mortgage, we know it’s not something you take lightly. The mortgage company you choose matters. We want you to know what’s important to us, too.