On average, the FHA loan closing process can take around 45 days. That’s from the time you submit a loan application to the time you actually close and get your keys, and it assumes that you’ve already found a home to purchase.
The entire application, underwriting, and funding process could take anywhere from 30 to 60 days.
- If it takes less than 30 days, you’ve got yourself a highly efficient mortgage team.
- If it takes longer than 60 days, it might be due to some kind of delay like additional underwriting requests.
- If you fall somewhere in the middle of that range, you can consider yourself average in terms of FHA loan closing timeline.
The typical 30 to 60 day timeframe refers to the loan processing timeline after a borrower has already found a home and made a successful offer. This estimate does not include the time spent house hunting, which can vary greatly depending on the market and other factors.
Sample FHA Loan Processing Timeline
To give you a better understanding of how the FHA loan process works — and how long it takes — we’ve broken it down into three main stages.
1. Application and Origination (1 – 5 Business Days)
The loan application sets the entire process in motion. This is when you submit a standard loan application form (Fannie Mae form 1003) and provide additional documents such as pay stubs, bank statements, and tax returns.
The lender will then originate the loan, which is a fancy way to say they’ll start the paperwork. This is when the terms of the loan are established, and when the lender and borrower commit to the agreement.
It might take anywhere from 1 to 5 business days to complete this stage of the process.
2. Home Appraisal Process (7 – 10 Business Days)
All FHA purchase loans require a home appraisal, and the purpose is twofold:
- The appraiser will review the property to determine how much it’s worth in the current market, based on recent and comparable sales.
- The appraiser will also examine the home to make sure it meets the FHA’s minimum property requirements for safety, structural soundness, and habitability.
Under normal circumstances, the appraisal process might take a few days up to two weeks. And there’s more to it than the appraiser’s visit. This process also involves local market analysis, form preparation, and communication back and forth with the lender.
Additionally, some parts of the U.S. have a shortage of qualified FHA-approved home appraisers. This and other factors could extend the timeline for some home buyers.
Repairs are another big variable. If the home appraiser determines that some work is required (missing handrails on stairs, chipping paint, etc.), the homeowner would have to make those repairs before the loan could be approved. A follow-up appraisal might be required to verify repairs.
Because of these variables, the appraisal process might take longer than the average presented above, especially if a home has a lot of issues.
3. Underwriting and Approval (Few Days to a Few Weeks)
After you have found a home, made an offer, and cleared the appraisal process, you’ll move on to the underwriting phase. This could take anywhere from one to four weeks, depending on the complexity of the transaction and any issues the underwriter identifies.
Definition: FHA mortgage underwriting is when a lender verifies a borrower’s eligibility to receive a loan insured by the Federal Housing Administration. The underwriter assesses the borrower’s financial situation and the property being purchased to determine if they meet the FHA’s requirements and guidelines.
There’s a good chance you’ll be asked for additional documents at this stage, too.
Variables that can affect the underwriting timeline include:
- Financial situation: Complex finances (like multiple income sources, self-employment, or credit issues) can lead to a longer verification process.
- Property appraisal: Availability of local appraisers and property complexity can delay the home appraisal required for all FHA loans. Repairs and follow-up appraisals can also make the process take longer.
- Lender’s workload: High loan application volumes can lengthen review and approval times.
- Borrower’s responsiveness: Underwriters often request additional information from borrowers, aside from what was provided up front. Satisfying such requests in a timely fashion can expedite the process.
- Underwriting method: Automated underwriting systems can speed up the process, while manual underwriting usually takes longer. A manual (human screening) process is often required when a borrower has non-traditional income, past credit issues, or a lot of existing debts.
- Errors or omissions: Mistakes or missing information in the loan application can cause delays as the underwriter seeks clarification or additional documents.
How Long Does It All Take?
According to data provided by ICE Mortgage Technology (formerly known as Ellie Mae), the FHA loan process typically takes around 45 days. That’s from the time you first apply for a loan to the actual closing and funding. This does not include the house hunting process.
If all three of these stages described above go smoothly, you could close the deal in less than a month. If you encounter bumps along the way, it might be closer to 60 days.
The typical processing time for FHA and conventional loans is very similar. Some people believe that government-backed mortgages take a lot longer to close, due to stricter requirements and “red tape.” But that’s not accurate.
Aside from the required appraisal mentioned above, the process for conventional and FHA-insured mortgages basically work the same way. So the timeframe is similar as well.
How to Help Keep the Process on Track
When you buy a home with a mortgage loan, certain things are beyond your control. You can’t make the appraiser work faster or skip some of the required steps.
But there are some things you can do to help keep the process on track:
- Prepare Documents: Rounding up financial documents can help you avoid delays during the application stage. FHA lenders typically request tax returns, pay stubs, bank statements, and proof of assets. At the very least, figure out how to obtain these documents so you’ll be ready.
- Verify Application: Complete the FHA loan application accurately and completely. An erroneous application could cause problems when the underwriter scrutinizes the loan file.
- Stay in Touch: Keep in contact with your mortgage company representative and escrow company in the days leading up to your closing. Make sure everyone has what they need from you, and that you understand what is expected.
- Respond Promptly: If you receive requests for additional information during the underwriting stage, respond quickly to minimize delays. This might include a letter of explanation for a bank deposit, additional employment verification, or clarification on a document discrepancy.
- Keep Your Job: Try to maintain stable employment throughout the process. Changing jobs could make it harder for the lender to verify your income, leading to closing delays.
- Limit Spending: Refrain from making major purchases or taking on new debt during the loan process. This can affect your debt-to-income ratio, one of the qualification criteria for FHA loans. This could delay the process or even lead to rejection.
Disclaimer: Every mortgage transaction is different because every borrower is unique. As a result, portions of this guide might not apply to your particular situation. When shopping for a mortgage lender, be sure to ask about their average closing time for FHA loans.
Brandon Cornett
Brandon Cornett is a veteran real estate market analyst and reporter. He has been covering the U.S. real estate market for nearly 20 years. More about the author