How To Qualify For FHA Loan in Antioch California (Contra Costa County)
Looking for an FHA Loan in Antioch California?
An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). They are popular especially among first time home buyers because they allow down payments of 3.5% for credit scores of 580+.
How Does an FHA Loan Work?
Borrowers can qualify for an FHA loan with a down payment as little as 3.5% for a credit score of 580 or higher. The borrower’s credit rating can be between 500 – 579 if a 10% down payment is made. It’s crucial to remember though, that the lower the credit score, the higher the interest borrowers will pay. Something also worth noting is that the FHA loan limits affect your FHA mortgage insurance – its just part of the FHA loan qualifications.
The FHA program was created in response to the increase of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help spark the housing market by making home loans much more accessible and affordable for people with less than stellar credit or a low down payment due to FHA mortgage limits in Antioch, California. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their home loan payments.
Because of that insurance, lenders can, and do, offer FHA mortgages at beneficial rates and with less stringent and more flexible qualification requirements. The FHA is an agency within the U.S. Department of Housing and Urban Development.
(Or call 213-474-7389 to ask a local lender anything!)
Benefits of FHA Loans: Low Down Payments and Less Strict Credit Score Requirements
Typically an FHA loan in Antioch is one of the easiest types of mortgage loans to get approved for because it requires a low down payment and you can have less-than-perfect credit. For FHA loans, down payment of 3.5 percent is required for maximum financing. Borrowers with credit scores as low as 500 can qualify for an FHA mortgage loan.
Consumers who cannot afford a 20 percent down payment, have a lower credit score, or can’t get qualified for private mortgage insurance should look into whether an FHA loan is the popular option for their personal circumstances.
Another advantage of an FHA mortgage is that it’s an assumable mortgage loan which means if you want to sell your home, the buyer can “assume” the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.
FHA Allows a 3.5% Down-Payment
For today’s home buyers, there are only a few mortgage options which allow for down-payments of five percent or less for residents of Contra Costa County. The FHA is one of them.
With an FHA mortgage, you can make a down-payment as small as 3.5%. This benefits home buyers who don’t have a lot of money saved up for down-payment; and, home buyers who would rather save money for moving costs, emergency funds, or other needs.
FHA Allows 100% Gift Funds
The FHA is vigorous with respect to gifts for down-payment. Very few loan programs will allow your entire down-payment for a home to come from a gift. The FHA will.
Via the FHA, your entire 3.5% down-payment can be a gift from parents or another family member, an employer, an approved charitable group, or a government home-buyer program. If you’re using a down-payment gift, though, you’ll need to follow the process.
The FHA Hybrid provides for an initial fixed interest rate for a period of three or five years, and then readjusts annually after the initial fixed period. The 3/1 and 5/1 FHA Hybrid products make it possible for up to a 1% annual interest rate adjustment after the initial fixed interest rate period, and a 5% interest rate cap over the life of the loan. The new payment after an adjustment will be calculated on the current principal balance at the time of the modification. This insures that the payment adjustment will be minimal even on a worst case rate change.
About Antioch California
Antioch is one of the oldest towns in the area.
In 1848, John Marsh, proprietor of Rancho Los Méganos, one of the largest ranches in California, developed a landing on the San Joaquin River in what is currently Antioch. The Empire Coal Company was developed by John C. Rouse and George Hawxhurst in 1876, which built a railroad that passed from Antioch towards the mines over what is now “F Street “( formerly Kimball Street ). The mines have actually long since stopped operation, and also the railway tracks have actually been dug up, though the structure that served as the Antioch terminus of the railroad still stands on the corner of F Street and Fourth Street, and the grading and also trestles still continue to be much as they were in those very early days.
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Who Are FHA Loans For?
FHA loans are offered to low-income individuals who have credit scores as low as 500. Individuals with a credit score between 500-579 can obtain an FHA loan with a down payment of 10%; individuals with a credit score higher than 580 can get an FHA loan with as little as 3.5% down. The Federal Housing Administration does not lend the borrower the money to take on a home loan or to buy the house. Rather, the borrower pays a monthly or annual mortgage insurance premium to the FHA to insure the loan which the lending institution issues to him or her. In case of default, the lender’s financial risk is minimized since the FHA would step in to cover the payments.
Having no credit history is not a problem with an FHA loan for Contra Costa County. Instead of your credit report, the lender may look at other payment-history records, such as utility and rent payments.
Even people who have gone through bankruptcy and foreclosure may still qualify for an FHA loan. However, the lower the credit score and the lower the down payment, the higher the interest rate.
(Or call 213-474-7389 to ask a local lender anything!)
Kinds Of FHA Mortgage Loans
In addition to its popular FHA loan, the FHA also insures other loan programs used by private loan providers. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers buy a house– and renovate it– all with a single home loan. Homeowners can also use the program to refinance their existing mortgage and add the expense of renovating tasks into the new loan. FHA 203( k) loans been available in two types:
- The restricted 203( k) has a much easier application process, and the repairs or enhancements should amount to $35,000 or less.
- The standard 203( k) needs additional documents and applies to improvements costing more than $5,000, but the overall worth of the home must still fall within the FHA home loan limitation for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home loan and is likewise guaranteed by the FHA. A HECM enables older house owners (aged 62 and up) with considerable equity or those who own their homes outright to withdraw a part of their home’s equity. The amount that will be readily available for withdrawal varies by customer and depends upon the age of the youngest debtor or eligible non-borrowing spouse, present rates of interest and the lower of the house’s appraised value or the HECM FHA mortgage limit or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA permit homebuyers to buy houses that are already energy effective, such as EnergyStar-certified buildings. Or they can be used to purchase and renovate older houses with energy-efficient, or “green,” updates and roll the expenses of the upgrades into the loan without a bigger down payment.
- FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is geared at customers whose earnings will increase gradually. You begin with smaller sized regular monthly payments that gradually go up. Five specific plans are available: 3 strategies that enable 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. Two other strategies set payment boosts over 10 years at 2 percent and 3 percent annually.
(Or call 213-474-7389 to ask a local lender anything!)
FHA Loan Limits for 2023
For 2019, the flooring limitation for FHA loans in the majority of the country is $314,827, up from $294,515 in 2018. For high-cost locations, the ceiling is $726,525, up from $679,650 a year earlier. These limitations are described as “ceilings” and “floorings” that FHA will insure. FHA updates limit amounts each year in action to altering home rates.
FHA is needed by law to adjust its amounts based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional home mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations vary according to the expense of living in a particular area, and can be different from one county to the next. Locations with a greater expense of living will have higher limits, and vice versa. Unique exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where house construction is more pricey.
FHA Loan Relief
Loan servicers can provide some versatility on FHA loan requirements to those who have suffered a severe monetary hardship or are struggling to make their payments.
That relief might be in the form of a short-term duration of forbearance, a loan adjustment that would decrease the rate of interest, extend the payback period, or delay part of the loan balance at no interest.
The FHA Hybrid Adjustable Rate
FHA administers a number of programs, based on Section 203(b), that have special features. One of these programs, Section 251, insures adjustable rate mortgages (ARMs) which, particularly during periods when interest rates are low, enable borrowers to obtain mortgage financing that is more affordable by virtue of its lower initial interest rate. This interest rate is adjusted annually, based on market indices approved by FHA, and thus may increase or decrease over the term of the loan. In 2006 FHA received approval to allow hybrid ARMs, in which the interest is fixed for the first 3 or 5 years, and is then adjusted annually according to market conditions and indices.
How do you Qualify for an FHA Loan in Antioch CA?
The FHA makes it relatively easy to qualify for a mortgage. Again, the government guarantees the loan, so lending companies are more willing to approve home loans. However, mortgage companies can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Antioch CA, you might have better luck with looking around for another.
Note: you never know until you submit an app. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender in Antioch to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the mortgage loan but these loans are geared towards lower income borrowers. If you’re lucky enough to have a high income, you aren’t disqualified like you might be with certain first-time home buyer programs.
FHA Closing Costs
While FHA defines which closing costs are allowable as charges to the borrower, the specific costs and amounts that are deemed reasonable and customary are determined by each local FHA office.
FHA Debt Ratios
In order to prevent home-buyers from getting into a home they cannot afford, FHA requirements have been set in place requiring borrowers and/or their spouse to qualify according to set debt to income ratios.
FHA Credit Issues
An FHA loan applicant’s past credit performance that attests good credit history and a solid track record of timely payments will likely be eligible for the mortgage.
How to Find FHA Lenders
Customers get their mortgage from FHA-approved lending institutions in Antioch rather than the FHA itself, which only insures the loans. FHA-approved lending institutions can have different rates and expenses, even for the same loan.
FHA loans are available through lots of sources– from the biggest banks and cooperative credit union to neighborhood banks and independent home mortgage lending institutions. Expenses, services and underwriting requirements differ among loan providers or home loan brokers, so it’s crucial to look around.
Learn more about how to find low FHA home loan lending institution.