We receive a lot of FHA-related questions by email that start with the words “how long.” How long does it take to get approved for an FHA loan? How long do they take to close? And so on. So I thought it might be helpful to compile a few of those FAQs onto one page.
Briefly: There are many variables that can determine how long it takes to close on an FHA loan. Underwriting is one of the biggest variables. Once you’ve found a home and signed a contract with the seller, the rest of the lending process might take two or three weeks on the short end, or two to three months on the long end. There are many variables and several different people involved. So the total processing time can vary.
How Long for an FHA Loan to Close?
Question #1: How long does it take for an FHA to close?
If you’re talking about the entire process from loan application to final approval and closing, there are dozens of variables. So it’s hard to assign an exact length of time to the process. But let’s try anyway.
Recent reports from ICE Mortgage Technology showed that it takes FHA loans about 54 days to close, on average. That’s based on the length of time between the application and the final funding of the loan.
Much will depend on the house-hunting process. Some borrowers apply for an FHA loan before they have found a house, meaning they get pre-approved first and then start shopping for a home. This is a wise strategy, actually, because it makes sellers more inclined to accept your offer.
The underwriting stage can vary widely from one borrower to another. It can smooth and quick, or it can be riddled with “conditions” that require extra steps from the borrower. It’s an important part of the process, so I’ve addressed it separately in the next section.
How long it takes your FHA loan to close will also depend on how efficient the loan officer, processor, and underwriter are. The mortgage industry is like any other industry in this regard — there are quick people and slow people.
According to Claudia Gravelle, a loan officer at Diversified Capital:
“If your loan is pre-approved (Verifications of Employment and Bank Statements, etc. all in file) and underwritten, your loan should be ‘final’ approved once the appraisal is in the hands of the underwriter and approved by them.”
She added that her company can get a final approval in as little as two weeks, as long as the file is complete. But there’s that critical underwriting process again. Ms. Gravelle’s estimate assumes that the loan has already been underwritten without raising any red flags. And that leads us to the next frequently asked question…
How Long Does FHA Underwriting Take?
Question #2: How long does FHA underwriting take?
You can’t close on an FHA loan until you get through the underwriting process. It is the underwriter’s job to ensure the loan meets (A) the lender’s minimum criteria for approval, and (B) the minimum eligibility criteria established by the Department of Housing and Urban Development / HUD. (It’s HUD that sets all guidelines for the FHA mortgage insurance program, by the way.)
Mortgage underwriting is something of a mystery to the average borrower. You’ll probably never speak to the underwriter directly. You won’t know exactly what is happening during this stage. The underwriter will send any requests to the loan officer, who will pass them along to you.
So how long does it take to clear underwriting and close the deal? An FHA loan can stay in the underwriting stage anywhere from two to six weeks, depending on how many issues come up. If you get a superstar underwriter, your file might clear his desk in a week or less.
There are plenty of ifs during the FHA underwriting process:
- If the file has all of the required documents, and the underwriter does not uncover any major issues when reviewing it (and he is not currently swamped with work) … he might get through it in a week or so.
- If the loan officer or processor put together an incomplete file with missing documents, and/or the underwriter comes up with a list of issues (conditions) that need to be resolved by the borrower, it could take two to three weeks.
- If the second scenario is true (sloppy paperwork, underwriting issues), and the underwriter currently has a heavy workload, this part of the process might drag on for four weeks or longer.
As you can see, there are plenty of variables that determine how long it takes to close an FHA loan.
What About the Appraisal?
FHA appraisals are a bit different from “regular” appraisals for conventional loans. That’s because the appraiser performs double duty. He must inspect the property for health-and-safety issues, as well as determining the market value. (See: FHA appraisal guidelines and process)
So, how long does the FHA appraisal process take? Here, there are less variables to deal with. The process is fairly straightforward. The appraiser will visit the property to view it in person, which should only take one day. He will also evaluate recent sales in the area, which can also be done in a day or two. He may visit some of the comparable homes for sale in the area, or homes that have sold recently. This can be done the same day as the visit to the subject house (the one being purchased).
Based on all of this research, he will issue an appraised value for the house. He will also prepare an appraisal report, which might take one day or several days, depending on workload. The appraisal report will be sent to the lender for review. So the entire appraisal process, including paperwork, can be completed in less than a week.
What Can I Do to Speed Things Up?
Recap: How long does it take for an FHA loan to close? Once you’ve found a home, made an offer, and signed a purchase agreement with the seller … the rest of the process might take two or three weeks on the short end, or two to three months on the long end. There are many variables and several different people involved in the process. So the timeline can cover a broad spectrum.
Some things are beyond your control during this process. For instance, you have no control over the skill and efficiency of the underwriter. But there are some things you can do to expedite the FHA loan process, so that it doesn’t take as long:
- When you first approach the lender, ask them about their FHA requirements for borrowers. What documents do they need? How does the process usually work? What can you do to expedite it?
- Start gathering the necessary documents early on. Different lenders have different documentation requirements. But most of them request the same types of documents — pay stubs, W2 forms for the past two years, two months worth of checking / savings account statements, federal income tax returns for the last two years, etc.
- Stay in close contact with your broker or loan officer through the entire process. Check in with them once a week if you do not hear anything. Make sure everything is on track, and that don’t need anything else from you (like additional paperwork). Don’t let the ball sit in your court for too long.
- If the underwriter gives you a list of conditions that must be resolved before your FHA loan can close, resolve them as soon as possible. This might include a request for additional documents, or a written explanation of some financial issue such as a withdrawal.
General Disclaimer: This article answers multiple questions about government-insured mortgages, including: How long does it take for an FHA loan to close? We have attempted to answer these questions as thoroughly as possible. Just keep in mind there are many variables that can affect the length of your loan-approval process. Every lending scenario is different, because every borrower is different. Your situation may be different from the examples presented above. This information has been provided for educational purposes only and does not constitute financial advice.