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FHA loans are one of the best options for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.

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Questions to Ask About an FHA Home Loan Before You Apply

Questions to Ask About an FHA Home Loan Before You Apply

Planning your FHA loan means asking some important questions early in the process.  The most obvious question is associated with the type of home you want. How large a house do you need? FHA mortgages allow the purchase of homes with between one and four living units.

Are you tempted to build a home instead of buying existing construction? If you want a property that is larger than one living unit, consider buying an existing construction home instead since many lenders who deal in FHA One-Time Close construction loans restrict the project size to a single unit.

If you choose to build instead of buy, you will either need land to build on or you will need to purchase land to build the home on.

If you choose to buy existing construction and decide on a multi-unit home, you’ll want to compare the costs of purchasing a duplex or townhouse compared to that of buying a two-unit property configured differently such as a two-bedroom suburban home.

Are you looking at newer homes or older ones? Assuming you want to buy existing construction with an FHA loan, older properties may have appraisal issues that newer ones do not; but older properties can be purchased with an FHA 203(k) Rehabilitation mortgage and you can repair them with loan funds.

This option eliminates the need for the home to be in “appraisal ready” condition at loan time but it does require you to make the home compliant with FHA standards and local building code as part of the rehab work and as a condition of loan approval.

And if you are buying a newer home but still want to do some improvements without applying for a rehab mortgage, you can always consider an FHA Energy-Efficient Mortgage, which adds extra loan funds specifically for installing energy efficient upgrades to the property such as storm windows and doors, energy efficient appliances, and more.

An FHA Energy Efficient Mortgage can be used with nearly any type of FHA home loan; it is also available with FHA refinance loans. You can even add this to an FHA 203(k) Rehabilitation mortgage to get more mileage out of your home loan.

Other important questions to ask yourself in the loan planning stages have to do with how affordable your loan will be. Do you need down payment help to afford your home loan? If so, begin searching your state and local government official sites for homeowner programs and down payment assistance programs.

The FHA and HUD do not offer these, but your state and local government might, in partnership with area lenders and other agencies. Down payment assistance is sometimes offered on a need basis. In other cases it may be offered to anyone who qualifies for the program as a first-time buyer or a buyer who has not owned a home in three years. Check your local state government to see what programs may be offered in your area.


FHA Loans Have Eligibility Requirements
The U.S. Government Backs Mortgages Through the FHA
Financed Properties Must Meet FHA Minimum Standards
See Your Credit Scores From All 3 Bureaus
See Your Credit Scores From All 3 Bureaus

More FHA Loan Articles

Home Loan Closing Costs

When you buy a home with an FHA mortgage, cash for closing costs and your down payment is required. It would be easy to assume you simply give the lender cash in the specified amount and that’s the end of the story.

How FHA Construction Loan Draw Disbursements Work

When you are approved for an FHA One-Time Close Construction loan, you get a single loan that pays for both the costs to build the house, and serves as the mortgage. One application, one approval process, and one closing date.

One-Time Close Construction Mortgages vs. Two-Close Loans

Did you know there is an FHA loan option that lets you build a house from the ground up? You can use this mortgage to build on land you own or on land you buy as part of the loan. But you will want to address some issues comparing construction loan options.

FHA Loans, Appraisals, and Excess Land

Sometimes when buying a home there may be a question of surplus or excess land. You likely won’t face this issue when buying a condo unit, but for other types of purchases, this may be an important factor in the appraisal process.

FHA Loan Income Rules to Consider Before Applying

Your lender is required to make sure you can realistically afford your mortgage, and that means verifying that your income is stable, reliable, and will continue after your mortgage has closed. What some don’t realize about this process is that there are standards for verifying income.

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