April 28, 2022
Applying for an FHA home loan doesn’t happen overnight–it takes time to plan, budget, examine your credit, and save money for the fees and expenses associated with an FHA mortgage.
If you’re new to the home buying process and don’t know where to start, a very good way to begin to get an idea of how much home you can afford with your present income, debts, and financial obligations.
Do you want to know how much you can borrow, and how much your payments might be? You can use an online mortgage loan calculator to estimate these amounts.
Remember that the amount of the loan you might qualify for and the amount of mortgage payment you can actually afford may be two different things altogether, which is why many web-based tools include multiple calculators for specific purposes.
How much is your monthly mortgage payment? That depends on a variety of factors including your down payment, interest rates, the term of your loan, and other factors. Using the online calculator is a very good way to see, in a general way, what to expect.
Another step in preparing for an FHA home loan is to anticipate fees and expenses associated with the home buying process. You may be required to pay for appraisals as well as compliance inspections should the appraisal turn up things that need to be corrected or repaired as a condition of the loan.
There may also be pest inspections, hazard insurance, and other expenses to budget for, and borrowers should definitely set aside money for a separate home inspection, which is quite different than an appraisal.
The FHA loan down payment is another area borrowers will need to prepare for–the down payment is mandatory (a minimum of 3.5%) and other fees and expenses may not be used toward the down payment.
Saving up for this expense is quite important, and all borrowers are required to document the sources of their down payment funds–you can’t use cash advances from credit cards, payday loans, or other “non-collateralized” types of loans to make your down payment.
Knowing these things in advance can be a big help in the planning process. Borrowers should expect to take at least 12 months to get ready for an FHA loan–any less and you might not be ready to apply.
Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we’ll get you there in 9 steps.
Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner’s Insurance
Step 9: What to Expect at Closing
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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