This article explains how to apply for an FHA loan in California, by breaking it down into a series of steps. The application form itself is straightforward. It contains five pages of fill-in-the-blank information. But there’s a broader process here as well, and that’s what we will look at today.
Applying for an FHA Loan in California: 5 Steps to Success
Here are the usual steps that take place (or should take place) when a home buyer applies for an FHA-insured mortgage loan in California.
1. Get a housing budget on paper first.
This is an important, but often overlooked, step in the FHA loan application process. Before talking to a lender or looking at houses, borrowers should examine their current financial situation.
Consider how much you earn each month, after taxes, and how much of that income goes toward your debts. How much do you have left over each month, after you’ve covered all of your non-housing expenses?
Having a basic housing budget on paper will help ensure your long-term financial stability. The goal here is to be able to cover all of your recurring monthly debts, including the mortgage payment, and still have money left over each month for savings, lifestyle expenses, etc.
2. Choose an FHA-approved mortgage lender.
To apply for an FHA loan in California, you’ll need to work with a bank or mortgage company that has been approved by the Department of Housing and Urban Development (HUD) to participate in the program.
California is a big state, so you have a lot of choices when it comes to your mortgage company. Bridgepoint Funding has been helping borrowers across the state for more than 16 years. We have a long track record of solid customer service, with many happy customers, and we know the FHA loan program inside and out. Contact us today with any questions you have about applying for an FHA loan.
3. Get pre-approved for a mortgage loan.
Pre-approval is when a mortgage company evaluates your financial situation (primarily your income, assets and debts) to determine how much they are willing to lend you. You can actually complete this process before you officially apply for an FHA loan in California. That’s why it’s called “pre” approval. And it’s wise to do so.
Getting pre-approved for an FHA loan offers several benefits:
- Pre-approval helps you narrow your home search to the kinds of properties you can afford, based on your financing.
- Sellers will be more inclined to accept your offer if you have a pre-approval letter from a lender. It shows that you’ve been pre-screened already, and that you will likely obtain financing.
4. Complete a purchase agreement / sales contract.
Before you can fully apply for an FHA loan in California, you’ll need to have a signed purchase agreement (a.k.a., sales contract) for the house you wish to buy.
To be clear, you can get pre-approved by a lender before you have a purchase agreement. That’s the whole point of pre-approval, to give you a loan amount so you can shop within a certain price range. But the actual loan application (mentioned below) requires information about the property being purchased. So you’ll need to know that information before you can complete the form.
The purchase agreement / sales contract includes the address of the property being purchased, the agreed-upon sales price, the proposed closing date, and other information relating to the sale of the home.
5. Complete a standard mortgage application.
Once you’ve identified the home you wish to purchase, you can officially apply for an FHA loan. This involves completing the Uniform Residential Loan Application (URLA), also known as Fannie Mae form 1003. This document is needed to begin loan processing and underwriting, which paves the way for the final approval and the disbursing of funds.