How to Apply for an FHA Loan in 4 Easy Steps

The steps to apply for an FHA loan are very similar to the steps to apply for any other home loan.  The FHA, or Federal Housing Authority, does not issue the loan itself – it simply insures the loan you get from a given lender. The lender requirements are basically the same. 

Step One: Check your Credit History

Contact each credit agency to request a free copy of your credit report and review the report for errors. If you notice errors, contact the credit report companies or your creditors directly to have them corrected.  also, take note of legitimate lates and provide your lender with an explanation letter.

Step Two: Select Your Lender

To apply for an FHA loan, you need to use an FHA-approved lender.  The FHA web site, http://www.hud.gov, has a list of FHA-approved lenders in your area; contact several and ask for a quote for your loan.   Ask for a good faith estimate to compare rates and fees of each lender. 

Also, talk to a mortgage broker for more information and get a good faith estimate from them as well.  A broker will help you sort through lenders for the best rates and costs.  Be sure you know who you are working with and ask for references.

 Step Three: Gather Your Paperwork

Once you have selected a lender, you will need to gather all the paperwork that will go with your loan application.  Typically, to apply for your FHA loan, you will need:

  • Your past two years’ worth of W-2 tax forms
  • Your past two years’ worth of tax returns
  • Your employers’ names and addresses for the past two years
  • Your own addresses for the past two years
  • Landlord information for the most recent two years
  • Most recent paystubs, to cover one month
  • Two most recent bank statements
  • Picture Identification
  • Social Security card

If you have any regular expenses that affect your income, such as alimony or child-support payments, you will need to supply the lender with supporting documents for the related expenses as well. If you were unemployed for any length of time, or if there are other items in your employment or financial history that require explanation, write a short letter explaining your situation and include it with your paperwork.

Step Four: Complete the Application

Fill out the application as carefully and completely as you can.  If you are confused by any item on your application, contact your lender and ask for advice. Be sure that you have attached all the paperwork your lender requests.  Deliver the application and ask for a timeframe of when you can expect to hear more about your loan.