FHA stands for the Federal Housing Administration where provide the mortgage insurance on loans. it includes mortgages on single family and manufactured homes and hospital. it provides the protection to the lender against the losses when the borrower defaulted on the loan. If the loan is backed with FHA, the lender will bear lesser risk where the FHA will pay a claim in case of the homeowner’s default. However, there are certain requirements that the lender must the in order to get the protection from FHA.
Obtaining the loan backed by the FHA is similar to the conventional loan. However, as mentioned above that the lender must meet certain requirements. Here are some information in order to help you to find an experienced loan officer and complete the necessary paperwork. first of all, you should look for an approved lender where being approved by the Housing and Urban Development (HUD) in order to get the FHA loan. If you have no idea in looking for the approved lender, you could ask your realtor to refer the approved lender to you. Besides, you should also verify that whether the mortgage company is specializing in FHA financing.
Secondly, you need to obtain the down payment in order to qualify for new construction FHA loan. the down payment should be at least 10% of the purchase price. The FHA underwrites will require a paper trail of the down payment paperwork, thus, provide your loan offer copies of the down payment documents to complete the application. Another tip for you is to know your loan limits. The loan limits of FHA could vary from country to country, thus, does some information research on HUD websites in order to help you determine the mortgage limits.
Please prepare all your personal documents such as bank statements, tax return, contract for purchase and other documents needed in application before going to the application. it could save a lot of time if you have done the paperwork early. Then, you could meet with your loan officer to complete the FHA mortgage application. There is application fee needed to pay for the cost of your credit report and home appraisal which normally fall into $350 to $500 depend on the property.
You can schedule the appraisal, but make sure that your appraisal is FHA approved appraiser as your house is not yet complete and the lender must furnish your appraiser with correct documents. Besides, the FHA underwriter might also want to see the plot mat, electrical layout and detailed description. After the appraisal has been done, the underwriting process will be resumed. Assuming that you have satisfied all the conditions, a clear-to-close will be issued and closing date will be scheduled. well, the FHA will required a final inspection to ensure it is ready for occupancy before the closing. at closing, you need to sign on the FHA closing package. Then, funds from the lender will be wired to the title company which is the builder. Then the key will given for your new house and the mortgage will be prepared for recording. First payment will be due in 1 or 2 months depend on the day you close.