How To Qualify For FHA Loan in Citrus Heights California (Sacramento County)

How To Qualify For FHA Loan in Citrus Heights California (Sacramento County)

Looking for an FHA Loan in Citrus Heights California?

FHA loans have been a flexible home loan 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 loans require 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 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 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 increase of foreclosures and defaults that happened in 1930s; to provide lenders with adequate insurance; and to help grow the housing market by making home loans more accessible and attainable for people with less than stellar credit or a low down payment due to FHA mortgage limits in Citrus Heights, 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, mortgage lenders can, and do, offer FHA mortgages 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.


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Benefits of FHA Loans: Low Down Payments and Less Strict Credit Score Requirements

FHA Loan in Citrus Heights

Typically an FHA loan in Citrus Heights 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 home loan is that it’s an assumable mortgage loan which means if you want to sell your house, 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 Sacramento 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 procedure.

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 Citrus Heights California

Citrus Heights voters approved the measure to incorporate the City on November 5, 1996, effective January 1, 1997. The measure won, with 62.5% of the votes.

According to the United States Census Bureau, the city has a total area of 14.2 square miles (37 km), all land. The city incorporated January 2, 1997 (January 1 according to the official city website), becoming the fifth city in Sacramento County.

Citrus Heights has a climate that is characterized by mild winters and dry hotter summers. The area usually has a low humidity and the average temperature throughout the year is 68 Fahrenheit, with the daily average ranging from 45° in December and January to 76° in July. Average daily high temperatures range from 53° in December and January to 93° in July. Average daily low temperatures range from 38° to 58°. The average year has 73 days with a high over 90°, with the highest temperature on record being 114° on July 17, 1925, and 18 days when the low drops below 32°, with the coldest one day record being December 11, 1932, at 17°.

Average yearly precipitation is 24.61 inches according to weather.com (, 2018). Almost no rain falls during the summer months (less than 1%), and over 80% falls between November and March. 3.47″, 3.39″, 4.46″, and 4.34″ per month respectively, though rainfall can be much greater than average. On average, 96 days in the year have fog, mostly in the morning, primarily in December and January. Typically, Citrus Heights enjoys 268 sunny days throughout the year.

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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 Sacramento 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.


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Kinds Of FHA Mortgage Loans

In addition to its popular FHA loan, the FHA also guarantees 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 purchase a house– and renovate it– all with a single mortgage. House owners can also utilize the program to re-finance their current mortgage and add the expense of remodeling tasks into the new loan. FHA 203( k) loans been available in two types:
    • The restricted 203( k) has a simpler application process, and the repair work or improvements need to amount to $35,000 or less.
    • The standard 203( k) requires additional documentation and applies to improvements costing more than $5,000, however the overall value of the property must still fall within the FHA home mortgage limit for the location.
  • Home Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse mortgage and is also 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 house’s equity. The quantity that will be readily available for withdrawal differs by debtor and depends upon the age of the youngest customer or qualified non-borrowing spouse, current rates of interest and the lesser of the home’s evaluated value or the HECM FHA home mortgage limit or list prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient home loans backed by the FHA permit property buyers to buy homes that are already energy efficient, such as EnergyStar-certified buildings. Or they can be utilized to purchase and remodel older houses with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a larger down payment.
  • FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is geared at borrowers whose earnings will increase in time. You begin with smaller sized regular monthly payments that gradually increase. 5 particular strategies are offered: 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 each year.

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FHA Loan Limits for 2022

For 2019, the flooring limit 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 ago. These limitations are referred to as “ceilings” and “floorings” that FHA will insure. FHA updates restrict quantities each year in reaction to altering house costs.

FHA is required by law to change its amounts based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional home loans ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limits differ according to the cost of living in a certain location, and can be various from one county to the next. Areas with a greater cost of living will have greater limitations, and vice versa. Special exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where home construction is more costly.

FHA Loan Relief

Loan servicers can offer some flexibility on FHA loan requirements to those who have suffered a severe financial hardship or are having a hard time to make their payments.

That relief might be in the form of a short-lived 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 Citrus Heights CA?

The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so mortgage lenders are more willing to approve mortgage loans. However, lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Citrus Heights CA, you might have better luck with 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 Citrus Heights 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 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 demonstrates 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 home mortgage from FHA-approved lenders in Citrus Heights instead of the FHA itself, which just guarantees the loans. FHA-approved lenders can have different rates and expenses, even for the same loan.

FHA loans are readily available through many sources– from the greatest banks and cooperative credit union to neighborhood banks and independent home mortgage loan providers. Expenses, services and underwriting requirements vary amongst loan providers or home loan brokers, so it’s important to look around.

Learn more about how to find low FHA home mortgage lender.


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