How To Qualify For FHA Loan in Big Bend California (Shasta County)
Looking for an FHA Loan in Big Bend California?
FHA loans have been a flexible mortgage program that’s been around since the 1930’s and is protected by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA mortgages require more flexible minimum credit scores and down payments than many conventional loans.
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 FICO score can be between 500 – 579 if a 10% down payment is made. It’s significant to remember though, that the lower the credit score, the higher the interest borrowers will receive. Something also worth noting is that the FHA loan limits affect your FHA mortgage insurance – its just part of the FHA loan requirements.
The FHA program was created in response to the rise of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making mortgages highly accessible and attainable for home-buyers with not so great credit or a low down payment due to FHA mortgage limits in Big Bend, California. Essentially, the federal government insures loans for FHA-approved mortgage companies 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 Big Bend is one of the easiest types of mortgage loans to qualify 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.
Borrowers 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 scenario.
Another advantage of an FHA mortgage is that it’s an assumable mortgage 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 Shasta 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 relative, 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 adjusts 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 very little even on a worst case rate change.
About Big Bend California
For numerous thousand years prior to the 19th century, Big Bend was the heart of the area of the Madesi people (pronounced Mah-day-see) people (or “band”) of Pit River Native Americans. The Madesi is one of 9 bands (also called “tribelets”) that spoke the Achomawi language. (Early anthropologists incorrectly called all 9 bands in the language team “Achomawi,” although only one of the bands was in fact called Achomawi.).
The Madesi band’s territorial region consisted of Big Bend as well as the bordering location of the Lower Pit River (Ah-choo’- mah in the Madesi dialect, which has few or no speakers still living), and also several of its tributaries, such as Kosk Creek (An-noo-che’ che) as well as Nelson Creek (Ah-lis’ choo’- chah). The major town of the Madesi got on the north bank of the Pit River, eastern of Kosk Creek, and also was called Mah-dess’, or Mah-dess’ Atjwam (Madesi Valley), and also was straight throughout the river from the smaller towns that surrounded the warm springs on the river’s south bank, which were called Oo-le’- moo-me, Lah’- lah-pis’- mah, and Al-loo-satch-ha. The Madesi people delighted in great abundance of food resources, which primarily contained acorns, deer, salmon, and other fish from the river.
The Big Bend area is so remote and isolated that the Madesi was one of the last aboriginal individuals of California to be invaded and also pushed out of their genealogical homeland.
As white settlers started to come to Big Bend in the 1860s, couple of Madesi were left in the area, as well as the novices started to claim the stolen land as their own. By the 1890s, Big Bend was ending up being a little quiet town of white settlers, focused around the warm springtimes. It was originally called Elena (1890) by the Euro-Americans settlers, and afterwards transformed to Henderson, (1906) before they started calling it “Big Bend” (1922 ).
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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 yearly 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 Shasta 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 Loans
In addition to its popular FHA loan, the FHA likewise insures other loan programs used by private lending institutions. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans help property buyers buy a home– and remodel it– all with a single mortgage. House owners can also utilize the program to refinance their existing mortgage and add the cost of remodeling projects into the new loan. FHA 203( k) loans can be found in 2 types:
- The restricted 203( k) has an easier application process, and the repairs or improvements must total $35,000 or less.
- The basic 203( k) requires extra paperwork and applies to enhancements costing more than $5,000, however the overall value of the home should still fall within the FHA mortgage limit for the location.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home mortgage and is likewise guaranteed by the FHA. A HECM allows older homeowners (aged 62 and up) with substantial equity or those who own their houses outright to withdraw a part of their house’s equity. The amount that will be offered for withdrawal differs by debtor and depends upon the age of the youngest borrower or qualified non-borrowing spouse, existing rates of interest and the lower of the home’s appraised value or the HECM FHA home mortgage limit or list prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA allow homebuyers to acquire houses that are already energy efficient, 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 deposit.
- FHA Section 245( a) loan – Also called the Graduated Payment Mortgage, this program is tailored at borrowers whose earnings will increase in time. You start with smaller sized regular monthly payments that gradually increase. 5 specific strategies are offered: 3 strategies that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. 2 other strategies set payment boosts over 10 years at 2 percent and 3 percent each year.
(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 nation is $314,827, up from $294,515 in 2018. For high-cost locations, the ceiling is $726,525, up from $679,650 a year back. These limitations are referred to as “ceilings” and “floors” that FHA will insure. FHA updates restrict amounts each year in reaction to altering house prices.
FHA is required by law to change its quantities based on the loan limits set by the Federal Housing Finance Agency, or FHFA, for conventional home loans ensured or owned by Fannie Mae and Freddie Mac. Ceiling and floor limits vary according to the expense of living in a specific area, and can be various from one county to the next. Locations with a higher expense of living will have greater limitations, and vice versa. Unique exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where house construction is more expensive.
FHA Loan Relief
Loan servicers can offer some flexibility on FHA loan requirements to those who have suffered a serious monetary difficulty or are struggling to make their payments.
That relief might be in the form of a short-term duration of forbearance, a loan modification that would lower the rates of interest, extend the repayment period, or defer 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 Big Bend CA?
The FHA makes it relatively simple to qualify for a loan. Again, the government guarantees the loan, so lenders are more willing to approve loans. However, mortgage lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Big Bend CA, you might have better luck with choosing 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 Big Bend to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the home 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 qualifications 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 shows good credit history and a solid track record of timely payments will likely be eligible for the home loan.
How to Find FHA Lenders
Customers get their home mortgage from FHA-approved lenders in Big Bend rather than the FHA itself, which only insures the loans. FHA-approved lending institutions can have different rates and expenses, even for the exact same loan.
FHA loans are offered through numerous sources– from the greatest banks and credit unions to neighborhood banks and independent mortgage lenders. Expenses, services and underwriting requirements differ amongst lending institutions or home mortgage brokers, so it’s important to search.
Learn more about how to find low FHA home loan lending institution.