How To Qualify For FHA Loan in Cedar Slope California (Tulare County)
Looking for an FHA Loan in Cedar Slope 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 credit score can be between 500 – 579 if a 10% down payment is made. It’s significant to remember though, that the lower the credit worthiness, 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 requirements.
The FHA program was created in response to the rise of foreclosures and defaults that happened in 1930s; to provide mortgage companies with sufficient insurance; and to help grow the housing market by making mortgages more accessible and affordable for home-buyers with less than perfect credit or a low down payment due to FHA mortgage limits in Cedar Slope, 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 home loan payments.
Because of that insurance, lenders can, and do, offer FHA mortgages at really attractive 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 Cedar Slope 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 loan.
Borrowers 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 circumstances.
Another advantage of an FHA loan is that it’s an assumable mortgage 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 Tulare 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 aggressive with respect to gifts for down-payment. Very few home loan programs will make it possible for 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 procedure.
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 allow 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 adjustment. This insures that the payment adjustment will be very little even on a worst case rate change.
About Cedar Slope California
The first occupant of Cedar Slope was the artist and seamstress Nellie Marshall in 1881. Nearby Marshall Creek is named after her. In 1945, 80 acres of the original homestead were purchased and developed by Les and Ruth Bailey and Fred and Hazelyn Hopkins. Tulare County approved this 80-acre expanse as Tract 119 in 1947, authorizing the construction of the area’s first cabins. Many of the first wave of cabins were built by World War Two veterans. The community owned Cedar Slope Mutual Water Company, established in 1947, provides and manages water to the development. Carl and Lynn Tapia rebuilt the Cedar Slope Inn after the original store on that site on Highway 190 burned down in the late 1960s. The couple ran it as a community bar and music venue until Carl suffered his first stroke in 1997. Afterwards the property passed into other hands. The Cedar Slope Inn suffered no meaningful damage during the Sequoia Complex Fire (SQF Complex).
According to the United States Census Bureau, the CDP covers an area of 0.7 square miles (1.8 km), all of it land.
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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 property. 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 Tulare 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 Home Loans
In addition to its popular FHA loan, the FHA also guarantees other loan programs used by private lenders. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers purchase a home– and refurbish it– all with a single home mortgage. Property owners can likewise utilize the program to re-finance their current home mortgage and include the cost of renovating jobs into the new loan. FHA 203( k) loans can be found in 2 types:
- The limited 203( k) has a much easier application procedure, and the repair work or improvements must total $35,000 or less.
- The basic 203( k) requires additional paperwork and applies to enhancements costing more than $5,000, but the total worth of the residential or commercial property need to still fall within the FHA home loan limitation for the area.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse mortgage and is also guaranteed by the FHA. A HECM enables older homeowners (aged 62 and up) with considerable equity or those who own their houses outright to withdraw a portion of their home’s equity. The amount that will be available for withdrawal varies by borrower and depends on the age of the youngest debtor or qualified non-borrowing spouse, existing interest rates and the lower of the home’s evaluated value or the HECM FHA home mortgage limitation or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA permit homebuyers to acquire houses that are currently 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 larger deposit.
- FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is tailored at customers whose incomes will increase with time. You start out with smaller month-to-month payments that gradually increase. Five specific strategies are offered: 3 strategies that permit 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. Two other plans set payment increases 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 2022
For 2019, the floor limitation for FHA loans in most 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 earlier. These limits are described as “ceilings” and “floorings” that FHA will guarantee. FHA updates restrict quantities each year in action to altering house rates.
FHA is needed by law to adjust its amounts based upon the loan limits set by the Federal Housing Finance Agency, or FHFA, for standard home mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limits vary according to the cost of living in a particular area, and can be various from one county to the next. Areas 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 building is more pricey.
FHA Loan Relief
Loan servicers can use some flexibility on FHA loan requirements to those who have actually suffered a severe financial challenge or are struggling to make their payments.
That relief might be in the form of a temporary period of forbearance, a loan modification that would decrease the rate of interest, extend the payback 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 Cedar Slope CA?
The FHA makes it relatively simple to qualify for a loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve home 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 Cedar Slope CA, you might have better luck with shopping around for a better option.
Note: you never know until you put in an application. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender in Cedar Slope to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the loan but these loans are geared towards lower income borrowers. If you’re fortunate 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
Borrowers get their mortgage from FHA-approved lending institutions in Cedar Slope instead of the FHA itself, which just insures the loans. FHA-approved lenders can have various rates and expenses, even for the very same loan.
FHA loans are offered through many sources– from the most significant banks and cooperative credit union to neighborhood banks and independent home loan lenders. Costs, services and underwriting requirements differ among lending institutions or mortgage brokers, so it’s important to look around.
Learn more about how to find low FHA home mortgage loan provider.