There are certain steps that you must take in order to qualify for an FHA loan. Yes, it is absolutely true that the FHA has the most flexible qualification guidelines for loans that require 5% or more as a down payment.
Nonetheless, this does not mean that anyone can get a loan no matter what. The FHA has qualification standards that must be met by the potential borrower, but the loan qualification standards are much more flexible than they are if you were to seek financing through more conventional means.
Before you even think about submitting a loan application, you should make sure that you meet the FHA's basic requirements. One of the basic requirements is that you must have been employed, preferably with the same employer, for two years or more. Your income will also be reviewed, and it will be expected to have increased or at least remained the same for a period of two years.
Your credit is important to the FHA, although it might ignore minor credit concerns in your credit history if there is a reasonable explanation for why you had problems. As a borrower, you must understand that when you get credit, you are giving your word that you will repay in the form of a signature on a contract. If you fail to abide by the contract, you make it seem as if you cannot manage your finances, and you make yourself a poor risk for a loan.
Your credit history for the past two years will be looked at by the FHA, and you should have supporting documents if there are any issues. The FHA will actually accept what it believes are reasonable explanations for the blemishes in your credit history. Some of the reasonable explanations that the FHA will accept are job loss, serious illness or job transfer. Your reason for failing to make payments or for being late cannot be that you simply had too much debt and you could not keep up with all your obligations.
If you have had serious credit issues, you are going to have to wait before you can qualify for an FHA loan, but you can use that time to clean up your credit report. A Bankruptcy requires a wait of two years from date of discharge and a foreclosure requires a three year wait. During that time, you must maintain a spotless credit history, and this will help you with your credit reports and score.
In any event, you will be required to submit a lot of paperwork regarding your personal, credit, savings and employment information. You can find all of the paperwork listed on the FHA website, and it is recommended that you go and have a look at what you will need. You must understand that your application will depend entirely on the paperwork that you submit, so you must make sure that you have everything that is requested on the website.
You may be required to submit even more paperwork, so you should be prepared for that eventuality. The paperwork that you will be requested to provide will actually depend on your individual case.
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