Reader question: “I want to use FHA for the smaller down payment it allows. There are some banks in my area that I think offer mortgages. Is this a good place to start when applying? Or should I look online? Which banks and lenders offer FHA loans these days? Or do they all provide them?”
Briefly: In a hurry? Here’s a quick overview of this response. Before a mortgage lender can offer FHA-insured home loans, they must be approved by the federal agency that manages this program. Due to the popularity of the program, most banks and lenders offer this type of financing. You can call around locally to find out which banks or lenders in your area offer FHA-insured mortgage products. You can also use the searchable “Lender List” available on the HUD website (www.hud.gov/ll/code/llslcrit.cfm). An increasing number of credit unions are now offering these products as well.
Let’s start with the good news: You should have no trouble finding a lender that offers this type of loan. These days, most banks and mortgage companies that provide home financing in general offer FHA products as well. This program has become increasingly popular over the last few years, so everybody wants to get it on the game.
But not just any company can provide this type of financing. Before they can participate in the program, lenders must be approved by the Department of Housing and Urban Development (HUD). It is HUD that manages the Federal Housing Administration’s mortgage insurance program. They also provide an online database of lenders, as mentioned earlier.
Today, more than half of first-time buyers use FHA loans to buy a house. While the program is not limited to this particular group, this clearly shows how popular it has become as a financing tool. As a result of this popularity, there are many banks and lenders that offer FHA loans to borrowers. You can search the HUD database mentioned above, use an online lending marketplace like Zillow, or apply through a local bank or mortgage company. You have a lot of options.
Which Banks Offer FHA Loans in My Area?
Before a local, state or regional bank can offer FHA home loans to borrowers, it must be approved by the Department of Housing and Urban Development (HUD). Financial institutions must apply for approval and submit a variety of documents, including license information and financial reports. Once approved, the bank becomes a “supervised mortgagee,” which means they can originate and underwrite FHA-insured mortgages. At this point, they’ll also be added to the HUD database, also known as the “lender list.”
The HUD.gov website offers a list of approved lenders (mortgage companies, banks, credit unions, etc.). You can use their searchable database to find out which banks have been approved to offer FHA loans in your area. You can search the list by state, county and city, in order to find local companies that participate in the program. It’s a huge list, so I recommend narrowing it down as much as possible by entering your city and/or zip code.
To get started: visit www.hud.gov/ll/code/llslcrit.cfm and enter your geographical information.
Do you currently have a banking relationship with a local bank in your area? Maybe for a car loan or an existing mortgage? If so, you can start there. Just call and speak to one of their loan officers, or visit their website to see if they offer FHA financing. The same goes for credit unions, if you happen to be a member of one.
Additionally, there are bound to be mortgage companies operating in your area, or at least within driving distance. One or more of them should offer FHA loans. Remember, it’s one of the most popular mortgage products available these days. So they’re not hard to come by.