FHA Guide to the Home Buying Process

This is information was gathered from the Office of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) to help you understand the Home Buying Process and FHA Guidelines.

The process of buying a home may seem difficult and intimidating, especially when you are working with the Federal Government backed mortgage.  However, working with an FHA-insured loan is really not so different than any other loan. Plus you have more protection against foreclosure with FHA, it is easier to qualify, you don't have to have perfect credit and it can cost you less each month. Let's get started.

Figure out how much you can afford.

What you can afford depends on your income, credit rating, current monthly expenses, down payment and the interest rate you will qualify for.  There are some online tools you can use, and guidelines that your real estate agent can help you with, but it's always better  to consult with an FHA-approved lender to find out for sure.

You should remember that pre-qualification is just to give you a preliminary idea of what you can afford, and to identify any major problems that you will want to fix. It's not a guarantee that you will be approved for a loan, but you will want to get pre-qualified to avoid any surprises.

Shop for a home.

You may already have a general idea of where you'd like to live based on where you're living now, where you grew up, where you have friends or family or where you work.  It is always recommended that you work with a local licensed real estate agent in the area you are looking to buy your home.

Make an offer.
Once you decide on the right house, discuss the offer process with your real estate agent. If the seller makes a counter offer (rejects all or part of your offer), you may need to bargain the terms of the sale. When you plan to finance the purchase of your home with an FHA-insured loan, your sales contract will include the FHA amendatory clause. This clause states that if the appraisal (the estimate of the property's fair market value) comes in at a price below the sales price, you can decide not to proceed with the purchase.

Get a home inspection.

Buying a home is one of the most important purchases you will ever make, so protect your investment by making sure that the home is in good condition. A home inspection is an in-depth and fair evaluation of a home's condition by a trained expert. Make sure the home inspector gives you detailed report that will:

• Evaluate the home’s physical condition: the structure, construction and mechanical systems.
• Find and list items that should be repaired or replaced, the estimated cost of those repairs
• Estimate the remaining useful life of major systems (such as electrical, plumbing, heating, air conditioning, septic systems where applicable), equipment, structure and finishes.  If it is an older home, you might also want to consider a detailed inspection for Termites. 

You will receive a written report of the home inspector's findings, usually within five to seven days after the inspection.