How To Qualify For FHA Loan in Callahan California (Siskiyou County)

How To Qualify For FHA Loan in Callahan California (Siskiyou County)

Looking for an FHA Loan in Callahan California?

FHA loans have been a flexible mortgage program that’s been around since the 1930’s and is 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 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 rating, 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 increase of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with sufficient insurance; and to help stimulate the housing market by making home loans highly accessible and attainable for home-buyers with less than stellar credit or a low down payment due to FHA mortgage limits in Callahan, California. Essentially, the federal government insures loans for FHA-approved mortgage lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.

Because of that insurance, lenders can, and do, offer FHA home loans at beneficial mortgage loan interest 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

FHA Loan in Callahan

Typically an FHA loan in Callahan 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.

Consumers who cannot afford a 20 percent down payment, have a lower credit score, or can’t get approved for private mortgage insurance should look into whether an FHA loan is the popular option for their personal scenario.

Another advantage of an FHA loan is that it’s an assumable mortgage loan which means if you want to sell your property, 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 Siskiyou 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 enable 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 changes annually after the initial fixed period. The 3/1 and 5/1 FHA Hybrid products enable 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 Callahan California

Callahan is an unincorporated community in Siskiyou County, California, United States. Callahan is located on California State Route 3 11.5 miles (18.5 km) south-southeast of Etna. Callahan has a post office with ZIP code 96014. As of 2009 it has a population of 50~.

The post office opened as Callahan’s Ranch in 1858 and changed its name to Callahan in 1892. The community was named after M.B. Callahan, who opened a travelers’ stop in the community in 1851.

This region experiences warm (but not hot) and dry summers, with no average monthly temperatures above 71.6 °F. According to the Köppen Climate Classification system, Callahan has a warm-summer Mediterranean climate, abbreviated “Csb” on climate maps.

Other Cities You May Be Interested In

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 Siskiyou 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!)

Types of FHA Loans

In addition to its popular FHA loan, the FHA also insures other loan programs provided by private loan providers. Here’s a take a look at each of them.

  • FHA 203( k) loans – These FHA loans help property buyers buy a house– and refurbish it– all with a single home loan. House owners can also utilize the program to re-finance their existing mortgage and include the expense of redesigning projects into the new loan. FHA 203( k) loans been available in two types:
    • The limited 203( k) has a much easier application procedure, and the repairs or improvements need to amount to $35,000 or less.
    • The standard 203( k) needs additional documents and applies to improvements costing more than $5,000, however the total value of the property should still fall within the FHA home mortgage limitation for the location.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse mortgage and is likewise insured by the FHA. A HECM permits older homeowners (aged 62 and up) with substantial equity or those who own their houses outright to withdraw a part of their home’s equity. The quantity that will be readily available for withdrawal differs by borrower and depends on the age of the youngest borrower or qualified non-borrowing spouse, present rates of interest and the lower of the house’s assessed worth or the HECM FHA home loan limit or prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA allow property buyers to buy homes that are currently energy effective, such as EnergyStar-certified buildings. Or they can be used to buy and remodel older homes with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a larger deposit.
  • FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is tailored at customers whose earnings will increase over time. You start out with smaller month-to-month payments that slowly go up. Five particular plans are offered: three plans that permit 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. Two other strategies set payment increases over 10 years at 2 percent and 3 percent yearly.

(Or call 213-474-7389 to ask a local lender anything!)

FHA Loan Limits for 2022

For 2019, the floor limit for FHA loans in most of the nation is $314,827, up from $294,515 in 2018. For high-cost areas, the ceiling is $726,525, up from $679,650 a year earlier. These limits are described as “ceilings” and “floorings” that FHA will insure. FHA updates restrict quantities each year in action to altering house costs.

FHA is needed by law to adjust its quantities based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limits differ according to the cost of living in a specific location, and can be various from one county to the next. Locations with a higher expense of living will have higher limitations, and vice versa. Special exceptions are produced real estate in Alaska, Hawaii, Guam and the Virgin Islands, where home building is more costly.

FHA Loan Relief

Loan servicers can offer some versatility on FHA loan requirements to those who have suffered a major monetary difficulty or are struggling to make their payments.

That relief might be in the form of a short-lived period of forbearance, a loan adjustment that would decrease the interest rate, 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 Callahan CA?

The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve loans. However, mortgage lenders can (and do) set standards that may be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Callahan CA, you might have better luck with shopping around for a better option.

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 Callahan 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 applicants. 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 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 mortgage from FHA-approved lenders in Callahan instead of the FHA itself, which only guarantees the loans. FHA-approved lenders can have various rates and expenses, even for the very same loan.

FHA loans are available through lots of sources– from the most significant banks and cooperative credit union to community banks and independent home mortgage lending institutions. Expenses, services and underwriting standards vary among lenders or mortgage brokers, so it’s essential to search.

Find out more about how to find low FHA home loan loan provider.


(Or call 213-474-7389 to ask a local lender anything!)