Are you in the market for FHA loans and are unsure of where to turn? Before you just choose any lender, keep reading to learn how to find the banks and lenders that would suit your needs the most.
The Bank Must be FHA Approved
First, in order to secure FHA financing, you must find an FHA approved lender. HUD approves lenders for the FHA based on their experience and knowledge on FHA financing.
The bank must complete specific paperwork and have it approved by HUD. They must also supply proof of their licensing and a copy of their financial reports. HUD then determines if the bank is a good representation of the FHA. If a bank is chosen, they can write and fund loans in FHA’s name. The FHA never funds the loans, so finding a bank that can write these loans is important.
Start Your Search With HUD
If you are searching for FHA lenders online, you can start with HUD. The HUD Lender List Search allows you to search for a lender based on your location, a specific lender name, and type of mortgage.
Once you enter your information, you can see the options in your area. If you don’t come up with enough options in your area, you can widen your search. You don’t have to use a lender in your exact vicinity. In fact, you can even use a lender in another state as long as they are licensed to do business in your state.
Before you choose a lender, it’s a good idea to conduct a sort of interview with them. Remember, you are taking a big financial risk by taking out a mortgage. It pays to take your time and do your research. Ask the lender the following questions:
- How much experience do you have with FHA loans?
- How long does the FHA process take with you?
- Do you add requirement to the FHA’s requirements?
- Do you have experience with FHA loans on condos and townhomes?
Basically, you want an FHA lender with experience. You don’t want to be the ‘guinea pig’ in the process. You want to know that the lender has seen many different circumstances when giving FHA loans and has handled them successfully.
Get Quotes from Lenders Offering FHA Loans
Because lenders can add their own overlays to loans, you may find that some lenders charge higher rates than others. It all depends on their tolerance for risk. It pays to shop around and talk to different lenders. If you meet the minimum FHA requirements, you should be able to find a lender. These requirements are as follows:
- 580 credit score
- 31/43 debt ratio
- Stable employment for 2 years
- Stable income for 2 years
- No collections
Again, these are the basic requirements, if a lender doesn’t add to them, you should be able to find a loan if you have these minimum requirements. You may also find that the lender offers competitive rates even with these minimal requirements. If a lender has overlays, they may have a lower risk for tolerance and may make up for it by charging higher interest rates.
In the end, it pays to shop around. Using HUD’s search tool, you can find lenders in your area and surrounding areas. You can also do some of your own research online or ask friends and family for referrals. No matter what you decide, make sure you get quotes from at least three lenders to make sure you get the best rate, term, and fees on FHA loans.Click to See the Latest Mortgage Rates»