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How to apply for an FHA loan

Learn more about eligibility and FHA loan applications

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FHA loans help make buying or refinancing a home more affordable in communities across the United States. The benefits of FHA loans include competitive interest rates, low down payments, flexible credit scores, and easier refinancing with the streamline program.

How you apply for an FHA loan is similar to the way you apply for other mortgages. There are differences you will want to understand, however. Read on to learn more about how to apply for an FHA loan!

Confirm you qualify for an FHA loan

Any U.S. citizen who meets the credit, income, and financial requirements can qualify for an FHA loan. These requirements include having a steady income and established credit, money for a down payment, and a debt-to-income ratio that meets the lender’s standards. Learn more about FHA loan requirements.

Understand FHA loan limits

It’s important to understand FHA loan limits when you want to buy a house with an FHA loan. The FHA loan program is designed to help people with moderate incomes buy houses. This means the Federal Housing Administration sets a limit on the amount of money you can borrow with an FHA loan, which can limit the price of the house you can buy. These limits vary by county, and currently range between $472,680 and $1,089,300 for a single-family home. Learn more about 2023 FHA loan limits.

Understand FHA property requirements

You can only buy or refinance primary homes with FHA loans, which are houses where you mean to live most of the time. You can’t finance second homes, rental properties, or investment properties with an FHA loan. There are also minimum health and safety standards the house must meet to qualify for financing.

Find an FHA lender

FHA loans are guaranteed by the Federal Housing Administration (FHA) and provided by private lenders like Freedom Mortgage. This means you can shop for interest rates and other terms when you want to buy or refinance a home with an FHA loan like you can for other mortgages. Freedom Mortgage is a top FHA lender in the United States* and we are committed to helping our customers finances houses with FHA loans!

Apply for an FHA loan

Think about getting pre-approved for an FHA loan. Pre-approval helps you better understand how much money you might be able to borrow to buy a house, and can make your more bid more attractive to sellers because they will have greater confidence you will be approved for a loan to buy their home.

Pre-approval isn’t necessary when you want to refinance your home with an FHA loan. When you want an FHA streamline refinance, the application is often simpler compared to buying a house with an FHA loan. You don’t need to provide new documents verifying your income and a new home appraisal is typically not needed. If you are a current Freedom Mortgage customer and qualify for a streamline refinance, we may be able to take your application right on the phone.

It is also possible to refinance and get cash from your home's equity with an FHA cash out refinance.

Remember that you will need to meet our credit, income, and financial standards to get your FHA loan application approved whether you want to buy or refinance a home.

Make a down payment

When you are buying a house with an FHA loan, you need to make a down payment. The minimum down payment required depends on your credit score. When you have a credit score of 580 or better, you can make a down payment as low as 3.5% of the price of the home with an FHA loan. If you want to buy a house that costs $250,000 then a 3.5% down payment would equal $8,750.

No down payment is required when you are refinancing a home with an FHA loan. Lenders may require you to have a certain amount of home equity when you apply for refinancing however, which they often measure using a loan-to-value ratio (LTV).

Understand mortgage insurance premiums

FHA loans come with two types of mortgage insurance premiums. There is an upfront mortgage insurance premium (UFMIP) equal to 1.75% of the principal loan amount you need to pay when you buy or refinance a home. For example, if you are borrowing $200,000 with an FHA loan then your upfront premium would be $3,500. There are also annual mortgage insurance premiums (MIP) that typically cost between 0.45% and 1.05% of the loan amount. You pay these premiums as part of your monthly mortgage bill. Learn more about mortgage insurance premiums.

We can also help you understand how your down payment, mortgage insurance premiums, and other factors might affect your monthly payment. Check out our FHA loan mortgage calculator to learn more.

Check the closing costs

FHA loans often come with closing costs when you are buying or refinancing a house. These costs can vary from lender to lender, and might include FHA loan application fees, discount points, and more. The upfront mortgage insurance premium is usually included in these costs. Learn more about FHA loan closing costs. By refinancing, the total finance charges may be higher over the life of the loan.

Understand FHA loan application approval and closing

There are important steps that take place after you apply for an FHA loan. Your lender will send you a set of documents called "Initial Disclosures" that provide information about your loan including loan amount, interest rate, and terms. You need to review and sign these disclosures before your lender can begin reviewing your loan application.

During their review of your FHA loan application, your lender may have additional questions or request more documents. Responding to these requests promptly can help keep the review process moving forward. If you meet the lender’s credit, income, and financial requirements, they will approve your loan application.

Then your lender will send you a set of documents called "Closing Disclosures" that provide final information about your FHA loan. You need to review and sign these disclosures before you can schedule a closing day, date, and location. At closing, you will need to sign loan documents and pay any closing costs that may be required.

When you purchase a house, your lender transfers money to the seller at closing and you take possession of the home. When you refinance, you pay off your old FHA loan at closing and replace it with a new FHA loan that has a better rate or better terms.

Apply for an FHA loan with Freedom Mortgage

Freedom Mortgage is a top FHA lender in the United States* and we are ready to help you buy or refinance a home with an FHA loan. Would you like to apply for an FHA loan? Please visit our
Get Started form or call our knowledgeable Loan Advisors at 877-220-5533.

*Inside Mortgage Finance, Jan-Jun 2022

Last reviewed and updated March 2022 by Freedom Mortgage Corporation.

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Get started today by getting a personalized evaluation of your home loan options from Freedom Mortgage.