While FHA lender requirements for FHA loan approval may vary slightly, most FHA lenders require similar documentation and follow a specific set of guidelines when approving you for an FHA mortgage.

*The terms "You" and "Your(s)" may be used to reduce redundant terms like "borrower(s) and generally refer to the applicants associated with the FHA loan.

The FHA loan process breakdown

The Application:
In order to determine exactly how to qualify the borrower(s) associated with an FHA loan, your FHA lender will need to take a preliminary application [either over the phone or in person] to help them understand exactly how to qualify you for your FHA loan. The information gathered by your FHA lender during the preliminary application will usually include, names, home addresses, employment information, income and social security numbers for the borrowers that will be associated with the mortgage.

Along with the collection of the borrower's personal information, the FHA mortgage broker or banker will need to know a little about the property itself and the details of the transaction (are you purchasing a home or refinancing? - Is the property a single family home or multi-family? etc.)

Some FHA banks require more information than others to get the application started and see what you qualify for but once this initial information is collected your FHA lender will begin the process of qualifying your for an FHA mortgage

Qualifying:
Now that your FHA lender has enough information about the type of loan, the property and the borrowers associated with the FHA mortgage, your FHA lender will compile and analyze this data, cross referencing it with current FHA guidelines to determine what you qualify for.

This process can take anywhere from 24 hours to a few weeks depending on the size of the FHA lending institution, the number of applications the FHA lender is receiving and also the complexity of the borrowers' situation.

Once your lender has determined if and what you're qualified for, they should be able to provide the following information:

• The interest rate you qualify for
• Your estimated monthly payment
• Your estimated closing costs
• A good faith estimate
• A list of documentation you must provide in order for your FHA lender to obtain a loan commitment

If the terms are agreeable and to your liking, your FHA lender will send to you, either by mail, email or fax, a packet of preliminary loan documentation for you to review, sign and send back to the lender. This preliminary information will include a standardized loan application (form 1003) a good faith estimate (breakdown of charges) a truth in lending and other informative disclosures regarding the details of your FHA loan transaction.

FHA loan processing: Once your lender has received the documentation they have requested from you, they will likely order an appraisal through an FHA approved appraisal management company, obtain a title report and submit your full loan application to underwriting. Some banks will accept a loan submission with out an appraisal in order to expedite the issuance of a loan commitment. The underwriter who reviews your FHA loan documents will likely approve your FHA loan and issue a loan commitment.

Loan Commitment: After your FHA loan has been reviewed and approved (with conditions) by an FHA approved underwriter, a loan commitment is issued by the bank providing the terms of your loan (rate, approved loan amount, etc.) along with a new list of documentation that must be submitted to the bank in order to close. The FHA lender may need updated income docs, changes made to the appraisal report, additional sign disclosures from you (the borrower) as well as a variable amount of additional information in order to issue a clear to close.

Rate Lock: You have a loan commitment, your are working on satisfying the stips (additional docs need by the bank to close), and now comes the time for your FHA loan officer to lock your rate. The FHA loan process may have taken a few weeks from the time at which you originally spoke with your FHA loan officer about your interest rate and hopefully, the rate your FHA bank offered you in the beginning has not changed. In reality, mortgage rates DO change every day although they remain relatively steady and only a minor fluctuation (if any) should have occurred) - Make sure your loan officer locks your desired interest rate and obtains a "Rate Lock Confirmation" so if rates go up, your rate is protected. Unfortunately, once your rate is locked, if general mortgage rates go down, you will not be able (in most cases) to get a lower rate. The rate you lock at is likely to be the rate at which you close.

Clear to Close: Now that your rate is locked and all necessary loan documents have been reviewed and approved by your FHA lender, your loan officer will obtain a "Clear to Close." Once this document is issued by the FHA lender, your loan officer will schedule a closing date that is mutually agreed upon by all parties associated with the transaction.

At closing: Your FHA loan closing can take place in a number of locations and those [individuals] required to be present at the closing will vary dependant upon the type of transaction. If your lender is not located in the same state to which you reside (this happens often) the closing will likely take place at an Approved closing attorneys' office. The bank attorney (whose fee is included in the closing costs) will help you review the documentation provided by the bank. Review this documentation you are signing very carefully, making sure all terms provided on the closing docs match those to which you agreed upon with your loan officer (including, rate, term, monthly payment, type of loan and any additional cash you are entitled to receive.)

The FHA loan process can be characterize as "by the book" but this is to ensure that you (the client) stay informed and are getting a safe loan.

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