FHA Loans: Mistakes to Avoid

The FHA loan program has been around for seventy years over which time the program has helped millions of American families realize the dream of homeownership. This has been achieved by offering loans to people with less than perfect credit and making the loans more affordable then conventional loans. The program has also helped people avoid foreclosure during hard economic times such as the subprime mortgage crisis we find ourselves in today.

Even though the FHA makes loans more affordable and easier to qualify for, there are still a few mistakes you will want to avoid before you start the loan process.

Not examining your credit

Just as with a conventional loan, you will need to submit your credit scores in order to qualify for a loan. While FHA loans are more lenient than conventional loans when it comes to these numbers, you will still need a decent credit score to be approved. Before you start the loan process, order your report so that you can see if there are any discrepancies that would prevent you from qualifying. If your score is low, you will need to give yourself plenty of time to bring it back up.

Skipping the pre-qualification process

Getting pre-qualified is a great idea as it will let you know if you meet the lender’s requirements for approval. When you get pre-approved, you will also have an idea of how much you’ll be able to borrow for a new house. Plus, pre-approval is free and has no obligations.

Ignoring your options

While FHA loans have helped make homeownership a reality for millions of Americans, it is by no means the only affordable choice when it comes to home loans. For example, if you are a qualified veteran you might consider applying for a VA Loan which requires no down payment on the property. Be sure to explore all your options with your lender.

Holding too much debt

Besides having to qualify based on your credit scores, you will also need to submit your debt-to-income ratio. If you have a lot of outstanding debt, this will hurt your chances of being approved for an FHA loan. Take a look at your debt and see what you can do to eliminate as much of it as possible.

If you are interested in obtaining an FHA Loan, fill out our secure online form and we’ll have you pre-approved in minutes.

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