How To Apply For An FHA Loan In Phoenix Arizona
Mortgage Banker
Richard Blair
Published on June 22, 2021
FHA Loan

How To Apply For An FHA Loan In Phoenix Arizona

If you’re looking to buy a home with a low down payment or are a first-time home buyer in Phoenix, Arizona, an FHA loan may be the solution you’re looking for. An FHA home loan is backed by the Federal Housing Administration (FHA) under the US Department of Housing and Urban Development (HUD). This flexible financing option puts the dream of homeownership within reach for American homebuyers who may not have an extensive credit history or access to a large down payment, which would otherwise disqualify them from traditional mortgages.

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If you’re planning to buy a new home and want to know more about how to apply for an FHA loan, you’ll find the information you need about FHA loan requirements and more below.

What is an FHA Loan?

If you’re a first-time homebuyer in Phoenix, Arizona, you may be wondering, “what is an FHA loan, and what’s the difference between a conventional loan vs. FHA loan?”

In 1934, the United States Congress established the FHA to help borrowers from lower-income brackets who experienced trouble qualifying for home loans. To be eligible for a mortgage before the establishment of the FHA, it was often necessary for homebuyers to have a sizable down payment equal to 20-50% of a home’s value. FHA home loans are insured by the FHA, allowing FHA-approved lenders to extend loans to buyers who cannot meet the typically stringent down payment and credit requirements of traditional loans.

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Today, there are several conventional loan programs that offer a down payment as low as 3% with no upfront mortgage insurance fee and a reduced rate for mortgage insurance. Still, these loans can be challenging to secure for some prospective homebuyers with a limited credit history or past credit problems. In addition there is an additional hurdle for home buyers on these programs because there is an income cap for qualifying. If the home buyer earns in excess of the income cap the program will not be available. The next available low down payment program for conventional would be 5%. If your credit score is over 720, in many cases the mortgage insurance on the Conventional 3% down payment program will be less than FHA.

Borrowers approved for an FHA loan may be able to put up a down payment of only 3.5%. HUD charges an additional Upfront Mortgage Insurance Premium (UFMIP) equal to 1.75% of the loan amount which is added onto your loan amount and financed over the life of the loan. In addition to paying the 1.75% UFMIP FHA borrowers pay an annual Mortgage Insurance Premium (MIP), which is included in their monthly FHA loan payments. FHA has a very competitive mortgage insurance rate that is the same for everyone putting down the minimum required down payment, regardless of credit score. Conventional loans have different tiers for mortgage insurance depending on the borrower’s credit score. With the minimum FHA down payment the monthly mortgage insurance never gets dropped, so you must pay mortgage insurance as long as you have the FHA loan. Conventional loans provide for mortgage insurance to be removed under very specific circumstances.

FHA can be a popular choice for many first time homebuyers because of the low down payment requirements, the liberal rules for receiving gift funds from family to be used towards down payment, and more lenient credit requirements. Here are four reasons why FHA helps certain home buyers get approved for a home mortgage:

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  • Requires only 4 years after a prior foreclosure vs. 7 years for a conventional loan
  • Requires only 2 years after a bankruptcy vs. 4 years for conventional loans
  • Allows for approvals with higher debt-to-income ratios than conventional
  • More lenient regarding credit and borrowers with shorter credit histories
  • If your mortgage broker or lender only pre-qualified you for a FHA loan you need to ask one simple question -”Why is an FHA loan the best option for my situation and do I qualify for a Conventional loan program? Steps to Apply for An FHA Loan

Many borrowers wondering how to qualify for an FHA loan are surprised to learn that the application process isn’t dissimilar from applying for a conventional mortgage. The most significant difference between a conventional loan vs FHA loan is the qualifications lenders consider to make their decision. Borrowers can prepare for this process by understanding the FHA loan requirements and ensuring they have all the necessary documents and funds before beginning their home search.


Step 1: Check your credit and other qualifications

If you haven’t checked your credit reports in the past, you should do so before beginning your home search. If your credit score doesn’t meet FHA loan requirements, you’ll need to take steps to raise it before you apply for an FHA loan. The mortgage lender will help by reviewing the credit report with you and explaining your credit score. To be approved for a 3.5% down payment FHA loan, you will need a qualifying credit score , a track record of making timely payments, and a debt to income ratio that meets FHA guidelines.

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It’s important to note that meeting all of the above criteria does not guarantee approval of an FHA loan. Each borrower is different, and lenders will also set criteria that determine whether they extend a loan based on the unique factors of each application.


STEP 2: Determine your budget and secure your upfront costs

Many first time homebuyers are surprised to learn of the different costs that come with owning a home. Beyond your down payment, and closing costs, you’ll need to budget for property taxes, HOA fees, homeowners insurance, and other monthly and one-time expenses when you buy a home. If you’re unsure about your budget, an online mortgage calculator can help you narrow down the amount you can afford and help you better understand your payment obligations.

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STEP 3: Find an FHA-approved lender

Once you’ve determined that you meet the broad criteria for an FHA loan and have a budget, you’re ready to find a lender. Not all lenders in Phoenix, Arizona, offer FHA loans, so you’ll need to ask prospective lenders if they offer them. To make the best decision and ensure you are getting the best loan for your circumstances, you may want to work with a loan originator who offers both FHA and conventional loans. This will allow you to explore all of your options and ensure you aren’t overlooking other loan products that may be a good fit for you.


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STEP 4: Get pre-approved

Once you have found a lender, you should get pre-approved for an FHA loan before you begin your home search. Though many borrowers start searching once they are pre-qualified for a home loan, the pre-approval process includes review by an underwriter and results in conditional loan approval, also known as a pre-approval letter. A pre-approval letter is generally good for 120 days and can make the home buying process run smoother once you are ready to make an offer on a home. While pre-qualified buyers have not yet been credit-approved, pre-approved borrowers are more appealing to sellers as their loan is credit-approved and typically only subject to an appraisal and title, so they can often close more quickly.



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What Documents Are Needed To Apply For An FHA Loan?

Your lender will give you a list of documents needed to complete your FHA loan application. These will include:

  • Proof of employment or self-employment for the past two years
  • Proof of earnings, such as current pay stubs
  • The last two years of personal tax returns and W2s
  • For the self-employed, two years of personal and possibly business tax returns with a Year To Date Profit & Loss Statement.
  • Banking documents detailing your savings and investments
  • If your down payment will include gift funds, the lender will have a Gift Letter for the donor to complete and provide information for additional documentation.
  • Identifying documents, such as copies of your driver’s license or state-issued id, along with details about any previous addresses or name changes

Your lender will also obtain a credit report with credit scores as part of the pre-qualification and underwriting process.

FHA Loan

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How Can Richard Blair Of Dwell Mortgage Help Me Apply For An FHA Loan

The Richard Blair Mortgage Team uses cutting edge technology to make the process of applying for an FHA loan in Phoenix, Arizona easy, convenient and straightforward. There are a lot of variables to consider when choosing the best loan option and the goal of my Team is to provide trusted advice and guidance for making wise mortgage decisions. In some instances, there may be other loan options other than FHA that will provide you with a better interest rate or a lower lifetime cost, as well, which can make it confusing to navigate the FHA loan application process on your own.

The Richard Blair Mortgage team of Dwell Mortgage can make the process of applying for an FHA loan much more effortless. Together we will help you understand the pros and cons of FHA and conventional loan programs so you can make the very best financial decision. Our goal is to make the loan application process transparent and pain-free, communicate throughout the process, and offer leading-edge tools along with decades of expertise to guide you every step of the way.

Whether you’re a first-time homebuyer or are buying a new primary residence, you can complete our simple FHA loan process in four steps:

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  1. Complete our online FHA home loan qualifier
  2. Receive loan options tailored to your needs and qualifications
  3. Compare the available mortgage options, interest rates and terms
  4. Choose the offer that’s the best fit for you


We understand how competitive the Phoenix real estate market is and how overwhelming it can be for homebuyers to navigate. We bring more than 20 years of experience in the mortgage industry to the table to ensure our customers enjoy the best experience throughout the loan process, providing personal attention, transparent communication, and cutting-edge technology every step of the way. The bottom line is to educate you regarding the best mortgage options and empower you to make wise decisions.

Do you have questions about applying for an FHA loan or want to learn more about qualifying for an FHA loan? The Richard Blair Mortgage Team is here and happy to help–call us at 480-542-1085 or send us a message today!

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