From the loan application to closing, the FHA loan process goes through a few steps that will eventually conclude in a loan agreement being signed and a home being purchased.
But what are the major steps involved in getting an FHA loan? How long does FHA approval take? And is there anything you can do to speed up an FHA loan approval?
These are some of the questions that I will discuss in this article, so you can have a general idea about the time it takes for an FHA loan to close.
Be advised, however, that there isn’t an exact timeframe in which things should unfold, and there are many things that could disturb the normal flow of events, causing delays in the closing of an FHA loan.
How Long Does It Take an FHA Loan to Close?
As I mentioned, there is no clear-cut answer to this question, especially because there are many variables in the loan processing time that can cause delays and push the closing of the loan to a later date.
Even so, I will attempt to give an estimate of the timeline and the variables that shape the length of an FHA loan approval and closing process and mention that it could take anywhere between 2 weeks, on the very short end, and 3 months, on the long end, for an FHA loan to close.
There are two ways to approach the application for an FHA loan. Some choose to do the house-hunting first, and then apply for an FHA loan. Others will apply for the loan first, they’ll get pre-approved, and only then start the process of looking for a house, which is a better strategy too since you’re more likely to be considered by a potential seller.
In the first scenario, it could take you a few weeks or even a few months to find a home that you want to buy. For the argument’s sake, let’s assume you find a home in 2 months.
Let’s also assume that you’ve already applied for an FHA loan and are pre-approved. From this stage on, assuming that all documents are in order and you’ve passed the credit screening and meet all eligibility conditions, the approval can take anywhere from 10 to 20 days.
The underwriting stage is where an FHA loan can stagnate even up to 6 weeks, followed by the appraisal process, which can also take a week or so.
Therefore, under ideal conditions, the whole process from start to finish can take as little as 4 weeks, but it can also drag out to a couple of months because of the many variables and persons involved in the process.
One such variable that deserves more attention is the underwriting process, which may present with a set of challenges that can stall the processing time of the loan.
Which brings us to the next important question:
How Long is the FHA Underwriting Process?
The underwriting process is an indispensable step in closing an FHA loan, but it’s also a step that can drag out quite a lot.
The underwriter is tasked with making sure that, on the one hand, the loan meets the lender’s minimum criteria for approval, and the eligibility criteria established by the Department of Housing and Urban Development.
As I mentioned the loan processing can stagnate a lot at this stage, especially if the underwriter uncovers major issues during the reviewing process or if the submitted documentation is incomplete.
You will not be required to meet with the underwriter as any requests are sent directly to the loan officer, who will then get in touch with you.
Depending on the workload of the underwriter, the issues that come up with your documentation and how soon they are resolved, the process can clear in a week or so or it can drag out for several weeks.
Here are some of the potential hurdles you may encounter during this stage:
- The general workload of the underwriter. This means that even if all your documents are in order and there are no issues that have been uncovered, you may still need to wait for your “turn” for your documents to be reviewed. Still, in an ideal situation, the underwriter may clear your files in a week;
- If there are issues that come up during the underwriting process, there’s going to be a list of conditions you need to meet before you can get cleared, which can also extend the date of closure by a few weeks;
- The loan processor or loan officer may have put together incomplete documentation, which will also stall the process until all documents are received and accounted for;
- These hurdles coupled with the heavy workload of the underwriter can cause delays of up to six weeks in this stage of the loan approval process.
Once you are cleared in this stage, there’s another variable to look out for, namely the FHA-specific appraisal.
How Long Does the FHA Appraisal Take?
So, you’ve set your eyes on your ideal home, you’re pre-approved for the FHA loan, you’ve passed the underwriting stage, and now you’re waiting on the appraisal.
Normally, under conventional loan appraisals procedures, the appraiser is only concerned with determining the value of the property. The FHA appraisal, on the other hand, is a bit different from conventional appraisals.
Besides determining the value of the property, an FHA appraiser will also check the property’s condition in terms of safety and health. Under HUD guidelines, the property will need to meet health and safety requirements.
Therefore, the FHA appraiser needs to make sure that the property is in order from a safety and health standpoint.
Luckily, this usually isn’t a lengthy process and there aren’t as many variables to worry about. Usually, the appraiser will visit the property for inspection, which they will carry out on the day of the visit.
There’s also a research process involved at this stage, which concerns evaluating recent sales in the area, and the state of comparable properties in the area.
The appraisal procedure will conclude in an appraisal report. This appraisal report is then sent to the lender for review. The entire appraisal process from start to finish usually takes less than a week.
Of course, the workload of the appraiser can be a variable that can delay things, but usually the process doesn’t take longer than a week or so.
Can You Expedite the FHA Approval Process?
If you’re wondering if you can do something to speed up the loan approval, there are indeed some things you can do. Since some things will be out of your control, you’ll need to focus on the things that you can do while the ball is in your court.
More specifically, here’s what you can do:
- Make sure you have a clear understanding and overview of the documents your lender needs, the steps involved in the loan approval process, and the requirements you must satisfy. This will help you stay on track with documentation and avoid issues during the underwriting process;
- Start getting all your documents ready early on. Make sure to ask your lender which documents they need, since there are some variations from lender to lender. You’ll be asked to provide documents such as pay stubs, federal income tax returns for the previous two years, documents related to your checking/savings account, etc.;
- Keep in touch with your loan officer during the entire process, so you’ll get immediate notice of any missing paperwork or additional requirement;
- Upon receiving a list of conditions / outstanding issues from your underwriter, make sure to get them resolved without delay. Since the underwriting process can drag out for so long, make sure you stay on top of your tasks and get them resolved as soon as possible.
In short, making sure you stay informed, getting all your paperwork in order, and meeting the required eligibility conditions will make sure things unfold much faster.
Other than these aspects, there’s no other way to make sure the loan approval is faster, since many things will depend on the workload of the underwriter, how fast the appraisal can put together the appraisal report, and whether there are any issues uncovered during each stage.
In Summary…
So, how long does FHA approval take? In ideal circumstances, the FHA loan approval — excluding the time you search for a house and your agreement with the seller — will take at least 2-3 weeks or 2-3 months at the longest.
As you can see, these lengths are estimates only since there are many variables, plus many persons involved in the approval and closing process. The key is to be on-time with your obligations, the rest is unfortunately out of your control.
I hope you are now better informed about the aspects that can lengthen or shorten your loan application and approval process and you get a general idea of the time it will take you to go through this process yourself.