How To Qualify For FHA Loan in Chiriaco Summit California (Riverside County)
Looking for an FHA Loan in Chiriaco Summit 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 home loans require lower minimum credit scores and down payments than many commonplace 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 credit score can be between 500 – 579 if a 10% down payment is made. It’s crucial to remember though, that the lower the credit rating, 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 adequate insurance; and to help grow the housing market by making home loans highly accessible and attainable for people with not so great credit or a low down payment due to FHA mortgage limits in Chiriaco Summit, 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 home loans at really attractive mortgage 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 Chiriaco Summit 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 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 mortgage is that it’s an assumable 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 Riverside 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 loan programs will permit 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 adjusts annually after the initial fixed time frame. 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 adjustment. This insures that the payment adjustment will be minimal even on a worst case rate change.
About Chiriaco Summit California
Chiriaco Summit is a small unincorporated community and travel stop located along Interstate 10 in the Colorado Desert of Southern California. It lies 19 miles (31 km) west of Desert Center on the divide between the Chuckwalla Valley and the Salton Sea basin at an elevation of 1,706 feet (520 m).
The ZIP Code is 92201, and the community is inside area codes 442 and 760.
The town has a general aviation airport, Chiriaco Summit Airport. A California Department of Transportation rest stop on Interstate 10, west of Chiriaco Summit, is called “Cactus City”, an ironic name referring to a non-existent city.
Lifeline transit service is provided by Palo Verde Valley Transit Agency towards both Indio and Blythe.
Originally known as Shaver Summit, Chiriaco Summit is the high point of Box Canyon Road, a gravel road that paralleled the Bradshaw Trail from the Coachella Valley to Blythe. The land was purchased by Joe Chiriaco, an entrepreneur from Alabama. After traveling west to attend a college football game in the Rose Bowl in 1925, he decided to stay and found employment with the Los Angeles Bureau of Water and Power (now Los Angeles Department of Water and Power or LADWP). He heard of plans to pave Box Canyon Road, so he purchased Shaver Summit and broke ground on a service station and general store. The hearsay proved true, and on August 15, 1933, the same day that cars began traveling over the brand-new U.S. Route 60, Shaver Summit was open for business.
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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 Riverside 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 Mortgage Loans
In addition to its popular FHA loan, the FHA likewise insures other loan programs offered by personal loan providers. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans help homebuyers buy a house– and remodel it– all with a single home loan. House owners can likewise utilize the program to re-finance their existing home mortgage and include the cost of redesigning tasks into the brand-new loan. FHA 203( k) loans can be found in 2 types:
- The limited 203( k) has an easier application procedure, and the repairs or improvements must amount to $35,000 or less.
- The basic 203( k) needs additional documentation and applies to enhancements costing more than $5,000, however the total worth of the home should still fall within the FHA mortgage limitation for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home loan and is likewise guaranteed by the FHA. A HECM allows older property owners (aged 62 and up) with substantial equity or those who own their houses outright to withdraw a portion of their house’s equity. The quantity that will be available for withdrawal differs by customer and depends upon the age of the youngest borrower or eligible non-borrowing partner, existing interest rates and the lower of the house’s evaluated value or the HECM FHA mortgage limitation or list prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA enable property buyers to buy homes that are already energy efficient, such as EnergyStar-certified structures. 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 known as the Graduated Payment Mortgage, this program is tailored at borrowers whose earnings will increase gradually. You start out with smaller sized monthly payments that gradually go up. 5 specific plans are readily available: 3 plans that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. 2 other plans set payment increases over 10 years at 2 percent and 3 percent every year.
(Or call 213-474-7389 to ask a local lender anything!)
FHA Loan Limits for 2023
For 2019, the flooring 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 limitations are described as “ceilings” and “floors” that FHA will insure. FHA updates limit quantities each year in reaction to changing home prices.
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 limitations vary according to the cost of living in a particular location, and can be different from one county to the next. Locations with a higher expense of living will have greater limits, and vice versa. Unique exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building is more pricey.
FHA Loan Relief
Loan servicers can provide some versatility on FHA loan requirements to those who have suffered a major financial 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 reduce the interest rate, extend the repayment duration, 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 Chiriaco Summit CA?
The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so mortgage lenders are more willing to approve mortgages. 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 Chiriaco Summit CA, you might have better luck with choosing another.
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 Chiriaco Summit 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 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 home loan.
How to Find FHA Lenders
Customers get their home loans from FHA-approved lending institutions in Chiriaco Summit rather than the FHA itself, which just insures the loans. FHA-approved loan providers can have various rates and costs, even for the exact same loan.
FHA loans are readily available through many sources– from the biggest banks and credit unions to neighborhood banks and independent mortgage lenders. Costs, services and underwriting standards differ amongst lending institutions or home loan brokers, so it’s crucial to search.
Discover more about how to find low FHA home mortgage lender.