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FHA Mortgage: List Of Documents And Conditions Necessary To Get Your Home Loan
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Expect Here?
SUMMARY
Of This PAGE
FHA Mortgage: List Of Documents & Conditions lenders require to make your home loan.
FICO: All lenders 620; many will go as low as 580 with 3.5% down still.
Some lenders do accept FICO 500 with 10% down.
2 years tax return, W-2 YTD earnings.
Loan application, form to pull credit, Form 4506-T for IRS transcripts.
Picture Id & signed copy of SS card.
Last 2 months bank statements and Down Payment proof of funds
Seasoning: Down Payment funds have to be in the bank statements at least for 2 months (or longer)
No new credit application until closing
Conditions may apply when your credit report comes back like a letter of explanation for any derogatory data in in your credit report. See samples below.
FICO® Scores
Mid FICO Score for FHA Loan:
All lenders 620 work with you;
Many will go as low as 580 with 3.5% down.
Some lenders will accept FICO 500 with 10% down. (*1) (*2)
I - You may know that there 03 main Credit Bureaus:
Equifax, Transunion and Experian;
II - Each bureau produces a FICO® Score according with the information
they have on your credit activities in their respective filesIII - Because not all lenders use all three bureaus so the data will be different
IV - AND because there can be outdated data on you in some
of the bureaus, the scores will rarely, if ever, be the sameV - It has been a long stablished practice that the mortgage lenders
will discard both the highest and the lowest score
AND they will use the mid score to make their decision
VI - (*1) If you have had some extreme hardship – like loss of job
(but you are since employed again), death of your espouse,
divorce: it there can be some exemptions.
In any of these circumstances, talk with your Loan Originator
VII - (*2) Elsewhere and in several pages of this website/blog
about the advantages of getting your Congress mandate FREE Annual Credit Report.
It is completely free once a year all across the USA. Depending on the state where you live it can be more than once – still free!
In possession of your Credit Report, you can check if there is any ‘old data’ that should no longer be in your records and/or any incorrect entry/ies that you can (and should) ask to be removed. The bureaus are obligated to keep our records (yours and mine) straight!
Sometimes a couple of those pesky errors put you off a few points of what you need to qualify for the loan AND/OR get better rates!!!
Here Are The Documents
AND Conditions For You
To Get An FHA Loan
1) Most recent 2 months statements of ALL asset accounts:
[ ] Checking [ ] Savings [ ] Investments
[ ] Retirement accounts
[ ] If you are retired – letter stating
[ ] SS Award letter for the current year
Note: Submit ALL pages, including blank pages
2) SEASONING – down payment funds must be shown in whatever combination of US financial Institutions accounts for at least 2 statements of the last consecutive months OR longer
3) PROOF OF INCOME:
Most recent two years Complete Tax Return 1040
IF employed:
a. Most recent two years W-2 -assuming they are available
b. However, the most recent 60 days W-2 clearly showing the year-to-date earning.
It is necessary to show continuing employment
c. At some point of the application a Form 4506-T Signed
– so that lender can attain a transcript of your tax return to cross reference and verify your 1040 (please see below)
IF Self-Employed: 1040-SE Tax Return and 1099 forms if available
I. If you file quarterly, please have filing copies handy
II. Bank statements of last 60 days will incredibly valuable to prove your income flow! Make sure that all your moneys go through your account
III. At some of the application a Form 4506-T Signed
– so that the lender can attain a transcript of your tax return to cross reference and verify your 1040
(please see below)
4) Letter of explanation regarding anything derogatory on your Credit Report.
Keep it simple and straight forward – 2 or 3 paragraph of 2 or 3 lines each, like:
a. In this date I got divorced and I got behind on some payments for a couple of months.
Sincerely,
b. I lost my job and it took 45 days to find another. Yours truly,
c. I was between jobs and I have to hang on to my savings. But I caught up with payments very quickly as soon as I got a new job. Thanks,
d. I moved and did not get my statement on time. Best,
e. I was deployed overseas and my brother was lax with the payments in my name. I changed to pay on line and it was fixed. Thanks,
5) Copy of a Legible photo Id government issued typically: driver’s license, military issued id or passport
6) Copy of your signed social security card
7) Loan Application: You will also submit a complete and signed Loan Application
8) Consent form to pull your credit reports from the bureaus
9) 4506-T Sign request for the most recent two years tax return from the IRS (To check against the already provided tax returns)
No New Credit Application
By all means, please avoid the following scenarios:
I. Do NOT spend or make any major purchases unless you have it okayed,
in writing, from your Loan Originator.
I would say that you had a medical emergency, lenders will be more forgiven, however wait till after the closing to buy furniture or a new car
…you can buy a house and then buy a new car …next day if you wish!
However, the reverse will NOT happen!
The Lender will ditch your home purchase and it will be another couple of years when you can qualify to buy a house again!
I had one client who bought a car for her husband while we were working her finances to buy a home!
She went to her car dealer for a ‘scheduled maintenance’ visit and told the ‘sneaky’ car salesman that her credit was good and she was going to buy a house.
He asked if he could pull her credit and she agreed. He said that she could ‘buy a car’ AND still ‘buy the house!’
She walked away from there with a car for her hubby alright!
And goodbye to the house!
It should have been: Buy the house first …AND buy the car next day!
II. Do NOT attempt to get financing on anything unless you have it okayed, in writing, from your Loan Originator.
I am quite sure the answer will be ‘no!’
This is another red flag that mortgage lenders do NOT like AND most will reject your mortgage application …more so if you consummate any purchase on that application
For these two last situations the advice is quite simply: No credit application whatsoever after you start the home mortgage loan application!
Wait until you have closed! Do NOT even make an application – There should be none till after you close!
Is there anything you still need
to know about FHA Mortgage: List Of Documents & Conditions lenders require to make your home loan?
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