Required Information for FHA Loans: Preparing Your Application

The required FHA loan information covers the primary categories of income, credit, savings and loan ratios. You will also be required to provide certain documentation across these categories. You may locate a simple preliminary application through your lender. Once this has been reviewed, you can then proceed to collect the documentation and full application necessary to secure your FHA home loan.

Income Range

Because the FHA is charged with the responsibility to provide affordable financing options, the income requirements are not as strict as with some traditional lenders. The portion of your total income spent on housing, including mortgage, upkeep, taxes and any home owners dues, will come into play when a lender decides whether or not to qualify you. The standard qualifying amount is approximately 29% of your gross monthly income. It is important to list your gross, or before tax, income on your application including any bonus payments or stock dividends.

Credit Guidelines

You will be subject to a full credit report to judge your credit worthiness prior to receiving an FHA loan. The FHA will permit minor credit flaws such as a late payment, but this late payment should be over two years expired. You should also prepare a statement declaring why you have a blemish on any particular part of your credit report. Handling this issue up front will help expedite your application. Possible reasons for credit problems include layoffs or job loss, change in careers or medical emergency. Divorce or family dispute may also explain some credit problems. Prepare personal statements or character references prior to submitting your application.

Savings Evaluation

Some lenders will require you to have a checking and savings account. They may also request your funds have been in place for some amount of time, typically three months. FHA loan requirements are more flexible here; you may even receive your down payment as a gift. The most important thing for you to prepare is proper documentation regarding the funds you are providing and where they came from. Essentially, you must prove this money is indeed yours and has been legally obtained. FHA will likely make an assessment on your bank account including assuring your deposits match your declared earnings and you are not frequently overdrawing your account. You will need to explain large deposits which are not from your paycheck in order to show the funds have been legally obtained. 

Debt Analysis

When you prepare your FHA loan application, be ready to show all outstanding debts. Your loan will not be able to exceed a certain income to debt ratio on your monthly finances. The "front-end ratio" is the ratio listed earlier, 29%, which assesses the amount of your total income spent on housing alone. The "back-end ratio," 41% maximum, takes into account all other debts including: car payments, student loans, personal loans, child support or alimony payments, credit card bills and taxes. Other expenses like utilities are not included in this calculation. You will need documentation on all of these debts for a complete analysis. 

Documents Needed

  • Two year's tax return including W-2's and 1099's

  • Pay stubs for 30 days prior to application

  • Self-employed individuals will need to show assets and liabilities

  • 3 month's worth of bank statements

  • Statements on investments such as mutual funds, CD's, stocks, etc.

  • All bills for credit lines showing your monthly payments and account balances

  • Contact information for your landlord

  • Possibly will need utility bills

  • If this applies to you, you will need documentation on your bankruptcy filing and discharge

  • Information on loans you have co-signed on

  • Drivers License

  • Social Security Card

  • Other papers as required in your personal case such as divorce papers, green card, etc.