Reader question: “A friend who recently purchased a home using the FHA program said it took him nearly four months to get approved. I find that to be unbelievable. Is it always that slow? How long does the FHA mortgage approval process take these days (in 2014), on average? And what can I do to speed it up?”
Once you have a signed purchase agreement for an eligible property, the approval process could take anywhere from two to three weeks (on the short end), or two to three months (on the long end). There are many variables involved. So that’s about as precise an answer as I can give you, without knowing all of the details.
For what it’s worth, your friend is an exception to the rule. It usually doesn’t take four months to get approved for a mortgage loan, unless the borrower has a lot of underwriting obstacles or conditions that need to be resolved along the way. A well-qualified borrower can get an FHA approval much sooner than that, typically within 10 to 30 days.
In Depth: How Long for FHA Approval?
How long does it take to get approved for an FHA-insured mortgage loan? If you’re talking about the entire process — from the initial application to the final approval and closing — it might take anywhere from two weeks to two months. This assumes you’ve already found a home, and that you’ve completed negotiations and have a purchase agreement in hand (see house hunting variable below).
Delays can occur all throughout the process. But it usually happens at one of two stages:
- Document gathering on the front end
- Resolving underwriting issues or “conditions” later in the process
This is where most FHA lending delays occur. You have some degree of control over these two areas. For instance, you can be proactive about rounding up all of the necessary documents when you apply for the loan. Also, if the underwriter presents you with any conditions that need to be resolved prior to approval, you can handle those items expeditiously. Those are two ways to move things along.
The FHA approval process varies quite a bit, and some of this variance has to do with you as a borrower. For instance, some people have a lot of credit or banking issues that come up during the underwriting process. So the underwriter has to send them a list of conditions that must be met, before the loan can move forward. This is known as a conditional approval. If the borrowers drag their feet resolving these issues, it will only slow the process down even more. So it will take longer to reach the finish line, which is closing.
Other issues that can delay the process include:
- Additional bank account withdrawals or deposits while the loan is under review
- Issues with down payment and/or closing-cost funds (e.g., not sourced and seasoned)
- Changes to the borrower’s income or employment situation
- An incomplete application file submitted by the loan officer
- The house appraises below the purchase price
- The property has title issues (liens, claims, etc.)
Of course, FHA process delays are not always the borrower’s fault. Sometimes an inexperienced underwriter (or one who likes to duck out early to play golf every day) can slow things down to a crawl. Some things are beyond your control.
As you can see, there are many factors that determine how long it takes to get approved for an FHA loan. That’s why the timeline varies so much. Some borrowers breeze through underwriting in a day or two, while others get bogged down for weeks.
The House Hunting Variable
House hunting is another big variable in all of this. If you’ve already found a home, and you have a purchase agreement in hand, you’re ready to move on to the appraisal and underwriting stage. The lender will send an appraiser out to determine the current market value of the home. After that, your application file will move along to the underwriter for a thorough review process.
If you haven’t yet found a house (or even started to look for one), then it’s a different timeline altogether. Now you’re adding in the house-hunting process, which could take weeks or months depending on local inventory. So a lot of it depends on where you are in the home-buying process right now.
Have you started working with a lender yet? If not, this should be one of your preliminary questions, especially if timing is critical for you. Ask them point blank: How long does the FHA mortgage approval process take for you, on average? What can delay the process? What can I do to make sure it moves along smoothly and efficiently? It’s in their interest to tell you.
Disclaimer: The lending process can be fairly complex, and it also varies from one borrower to the next. As a result, portions of this article may not apply to your situation. This information has been provided for educational purposes only and does not constitute financial advice.