If you are buying a home for the first time, you may be eligible to receive a loan that is guaranteed by the Federal Housing Administration (FHA). FHA loans allow you to buy a house with a down payment of as little as 3.5% while also benefiting from less stringent credit requirements. What do you need to do to ensure that you are prepared to submit your application for financing?
- Get Your Most Recent Pay Stub
The first thing that a lender is going to want to see is your most recent income information. Typically, you will have to supply your most recent paycheck as well as your most recent tax return to verify your income. If you are self-employed, you will have to verify your income by producing a profit/loss statement as well as your two most recent tax returns.
- Provide Documentation for All Income Sources
If you receive income from a source other than a job, you will need to provide documentation as to where that income comes from. For example, you will need to document when you will earn investment income and where those accounts are. Applicants who receive child support or other payments from a third-party need to document the amount of those payments and verify their receipt for the foreseeable future.
- Where Is Your Down Payment Coming From?
The FHA requires that you show where your down payment is coming from if you are borrowing money from a third-party provider. If your mom was giving you $5,000 for a down payment or your boss was giving you $10,000 for a down payment, you would need to have documentation that says where the money came from and that this person is not entitled to equity in the house in exchange for the money.
- Have the Home Inspected and Appraised
To gain approval for an FHA loan, you will need to have any property that you want to purchase inspected and appraised. This ensures that the lender is not making a loan for more than the property is worth or making a loan for a property in poor condition. It is important to note that even if you aren't required to have an inspection as part of the loan process, it is a step that buyers should never skip.
Getting a loan through the FHA is a great way for first-time buyers to realize their dream of owning a property. As long as you prepare yourself properly for the loan application process, you can gain approval for your first mortgage with as little hassle as possible.
