11 Documents That Are Needed for FHA Loan Underwriting and Approval

The Federal Housing Administration (FHA) mortgage insurance program has specific requirements when it comes to loan documents and their expiration dates. These guidelines can be found in HUD Handbook 4000.1, also known as the Single Family Housing Policy Handbook.

Here are some of the most important documents you’ll either provide or encounter when applying for an FHA-insured home loan.

1. Loan Application (Fannie Mae Form 1003)

One of the first documents you’ll encounter when applying for an FHA loan is the application form itself. All borrowers who apply for this program must complete and submit a Uniform Residential Loan Application (URLA), also known as Fannie Mae Form 1003.

The FHA loan application form requires a lot of information, including:

• Personal Information: Full legal name, Social Security Number (or Individual Taxpayer Identification Number), date of birth, citizenship status, contact information, etc.
• Income and Employment: Current employer and position, length of employment, other sources of income (investments, rental properties, etc.).
• Assets and Liabilities: Bank accounts, investments, retirement accounts, owned real estate, credit cards, loans, etc.
• Loan and Property Information: Loan purpose (purchase, refinance, etc.), property address, estimated property value. *
• Declarations: Previous bankruptcies, foreclosures, or judgments; outstanding lawsuits or legal actions; intent to occupy the property as a primary residence.

* If you complete an FHA loan application before you’ve found a property to purchase, you obviously won’t be able to fill in the “property” section of the document. And that’s okay. You can fill it in later, once you’ve located a home you wish to purchase.

2. Addendum to the Loan Application

Borrowers seeking an FHA loan must also complete an addendum to the main loan application form. The HUD-92900-A (HUD Addendum to Uniform Residential Loan Application) collects additional information specifically to FHA loans. It also serves as a certification for lenders to confirm compliance with FHA requirements.

The borrower and co-borrower must sign this document, along with the underwriter.

3. FHA Loan Underwriting Summary

The HUD-92900-LT, “FHA Loan Underwriting and Transmittal Summary” is used for both purchase and refinance transactions. It’s an underwriting document that outlines the underwriter’s assessment of the borrower’s qualifications (i.e., whether or not the person is qualified).

This FHA document also includes details about the mortgage, such as the type of loan (fixed vs. ARM), the amount being borrowed, the interest rate, the term, etc. It also includes information about the borrower, including their income and debts.

Only the underwriter signs this document. The borrower does not.

4. Sales Contract (a.k.a., Purchase Agreement)

The FHA loan file must include a signed copy of the real estate sales agreement. This document is also referred to as the purchase agreement or sometimes just “the contract” for short. It outlines the terms and conditions of the real estate transaction, as agreed to by the buyer and seller.

The sales contract typically includes a property description, the purchase price, the home buyer’s mortgage financing terms, the closing date, and any contingencies the buyer wishes to include.

FHA requires mortgage lenders to “ensure that (1) all purchasers listed on the sales contract are Borrowers, and (2) only Borrowers sign the sales contract.”

When an FHA loan is being used, the sales agreement usually includes an amendatory clause as well, which protects the buyer’s earnest money. So let’s talk about that next.

5. Amendatory Clause

In a typical home buying scenario, the buyer will sign a sales agreement with the seller before an appraisal has been conducted. In that scenario, the agreement should include an amendatory clause.

Note: This is not a separate FHA loan document, but a legal clause that gets inserted into the purchase / sales agreement. We’ve broken it out here to emphasize its importance.

The amendatory clause states that you (the buyer) are not required to purchase the home unless it gets appraised for at least the purchase price.

If the appraised value comes in lower than the purchase price, you can walk away without penalty or renegotiate the price. This clause gives you options and protects your earnest money from forfeit.

6. Credit Reports

Your credit reports contain a lot of information about how you have borrowed and repaid money in the past, including any loans or other debts you currently have. Mortgage lenders use this information to determine the level of risk you bring as a borrower.

Credit reports can include things like payment history, credit inquiries, bankruptcies, judgments, foreclosures, and tax liens. They can also show your “utilization ratio,” which is the amount of your available credit that you’re currently using.

Credit reports are a required document for most FHA loans. Mortgage lenders usually obtain reports from at least two of the three reporting bureaus (Experian, Equifax and TransUnion).

In cases where a borrower does not have a credit report, the lender will typically “downgrade” the file to manual underwriting versus automated writing, giving it closer scrutiny.

7. Verification of Employment (VOE)

As its name suggests, the VOE verifies a borrower’s employment status and income for mortgage underwriting purposes. It’s typically completed by the borrower’s employer and submitted directly to the lender, as part of the FHA document gathering process.

Mortgage lenders can use their own forms for this purpose, if they meet all requirements. Or they can use a standardized VOE document like Fannie Mae Form 1005.

The Verification of Employment can vary from one transaction to the next, and from one lender to another. But it usually includes the following information:

• Employee name, position, and date of hire
• Employment status: full-time, part-time, seasonal, etc.
• Income information: base salary, overtime pay, bonuses, commissions, etc.
• Employer Information: Company name, address, and contact information

Best practice: Start with your lender before speaking to your employer. Find out what kind of VOE document your lender uses, what kind of information, and how they want to receive it.

8. Real Estate Certification

The application file must include a real estate certification signed by the buyer, seller, and the seller’s real estate agent (listing agent). This is a short boilerplate document that all parties must sign, stating that “the terms and conditions of the sales contract are true to the best of our knowledge and belief.”

9. Appraisal Report

FHA loan document guidelines require the lender to include an appraisal report within the mortgage file. Lenders typically use Fannie Mae form 1004, the “Uniform Residential Appraisal Report.” But similar forms may be acceptable.

The home appraiser will use this document when appraising the home that’s being purchased. All homes purchased with an FHA-insured mortgage loan must undergo an appraisal.

With an FHA purchase loan, the home appraisal serves two purposes:

1. It determines whether or not the property meets HUD’s minimum property standards.
2. It also estimates the fair market value of the home, to ensure it aligns with the loan amount.

Note: This document might not be needed for FHA “streamline” refinance transactions, which can typically be processed without an appraisal. But it’s always required for purchase transactions.

10. Income Tax Returns

Borrowers who apply for an FHA loan typically have to provide federal income tax returns for the previous two years. The mortgage lender will have you sign a document that allows them to request your tax returns directly from the IRS.

According to the HUD handbook, the lender must “obtain the Borrower’s signature on the appropriate Internal Revenue Service (IRS) form to obtain tax returns directly from the IRS for all credit-qualifying Mortgages at the time the final [loan application] is executed.”

Tax returns provide important information about a borrower’s income history, including wages, salary, bonuses, and other forms of earnings. Mortgage lenders use this information to verify that the income claimed on the loan application is accurate, based on the borrower’s tax filings.

When you apply for an FHA loan (or sometime after that), you’ll probably have to sign an IRS Form 4506-T, Request for Transcript of Tax Return. By signing the document, you’re giving your consent for the IRS to release your tax information to the mortgage lender.

11. Verification of Rent or Mortgage Payments

FHA requires lenders to review the loan applicant’s payment history for either their rent or their monthly mortgage payments, whichever applies.

There are several ways to check this box. It can be in the form of a written letter from the mortgage servicer or landlord. It could be pulled from the borrower’s credit report. Or the lender could review the “most recent 12 months of cancelled checks or receipts for payment of the rent/mortgage.”

Age and Expiration of Loan Documents

The Federal Housing Administration also has specific requirements for the age of documents that are included within the loan package, including a 120-day rule.

Most of the documents used for the origination and underwriting of an FHA loan should not be more than 120 days old on the Disbursement Date. This is the date when your mortgage lender actually releases funds to the escrow or title company, in order to complete the sale.

Home appraisals, on the other hand, typically remain valid for 180 days from the effective date of the appraisal report.

Additionally, FHA loan documents that are not affected by the passage of time can exceed the 120-day rule mentioned above. This applies to things like divorce decrees and tax returns, which typically do not change with the passage of time.

In most other cases, the 120-day rule applies for loan document expiration.

Disclaimers: This list includes some of the most common documents needed for FHA loan underwriting, but it’s not exhaustive. Depending on your situation, you might have to submit, review or sign additional paperwork as well. Your lender should provide you with a complete list of documents they require.