How To Qualify For FHA Loan in Corcoran California (Kings County)
Looking for an FHA Loan in Corcoran California?
An FHA loan is a home loan that’s 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 rating can be between 500 – 579 if a 10% down payment is made. It’s crucial 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 companies with adequate insurance; and to help spark the housing market by making mortgages more accessible and affordable for people with not so great credit or a low down payment due to FHA mortgage limits in Corcoran, California. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their home loan payments.
Because of that insurance, mortgage companies 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.
(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 Corcoran 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 scenario.
Another advantage of an FHA mortgage loan is that it’s an assumable 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 Kings 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 mortgage 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 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 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 time frame. 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 very little even on a worst case rate change.
About Corcoran California
Corcoran was founded by Hobart Johnstone Whitley, a prominent land developer from southern California, who took the lead in building Corcoran (the main street of the community is named in his honor). Liking what he saw during a visit to the area in 1905 (a blacksmith shop, small store, scattered homes and a lush, untapped vista with herds of grazing wild hogs, horses and steers) Whitley purchased 32,000 acres (130 km) to start development. Much like in the San Fernando Valley (Van Nuys and Canoga Park his “creations”), Whitley “leveraged” his holdings with the support of important Los Angeles businessmen. Whitley first intended the town be named “Otis”, after Harrison Gray Otis of the Los Angeles Times, and streets as Otis, Sherman, Letts (the Broadway store) and Ross (after his son, Ross Whitley) show the connections. Whitley, it is claimed, purchased and platted some 150 towns over the American West—and Corcoran is one of his last.
Whitley moved a member of his real estate firm, J. W. Guiberson, to the area. Guiberson became one of the many pioneers of the community, building the first home and business structure in Corcoran. His family also helped establish the first church in the community, an event which helped lead to the town’s incorporation on August 14, 1914.
The basis of Corcoran’s economy then and now is agriculture. Initially, the most successful crops were grains, alfalfa and sugar beets.
In 1933, more than 12,000 workers went on strike against cotton farmers, one of the largest California agricultural strikes of 1933. Strikers in Corcoran created a tent city that eventually held more than 3,000 people, more than double the town’s population. Its lack of water or sewage systems created waves of illness. Streets were staked out in the tent city, and committees of workers governed the camp.
The J. G. Boswell Company was established in Corcoran in 1921 and remains a major employer in the city.
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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 Kings 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 Mortgage Loans
In addition to its popular FHA loan, the FHA likewise guarantees other loan programs offered by personal lending institutions. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers acquire a house– and renovate it– all with a single home mortgage. House owners can also use the program to refinance their current home loan and include the cost of redesigning tasks into the brand-new loan. FHA 203( k) loans been available in two types:
- The restricted 203( k) has a much easier application procedure, and the repair work or enhancements should amount to $35,000 or less.
- The basic 203( k) requires additional paperwork and applies to enhancements costing more than $5,000, however the overall worth of the residential or commercial property must still fall within the FHA mortgage limit for the area.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home loan and is also guaranteed by the FHA. A HECM permits older house owners (aged 62 and up) with considerable equity or those who own their homes outright to withdraw a part of their home’s equity. The amount that will be available for withdrawal varies by debtor and depends upon the age of the youngest debtor or qualified non-borrowing partner, current rates of interest and the lesser of the house’s appraised value or the HECM FHA home loan limit or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA allow property buyers to purchase houses that are already energy effective, such as EnergyStar-certified structures. Or they can be utilized to purchase and redesign 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 called the Graduated Payment Mortgage, this program is geared at borrowers whose incomes will increase in time. You start out with smaller month-to-month payments that gradually increase. 5 specific plans are offered: three plans that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. 2 other plans 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 areas, the ceiling is $726,525, up from $679,650 a year ago. These limitations are described as “ceilings” and “floors” that FHA will guarantee. FHA updates limit quantities each year in response to altering home costs.
FHA is required by law to adjust its amounts based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations vary according to the expense of living in a particular area, and can be different from one county to the next. Areas with a greater cost of living will have higher limitations, and vice versa. Unique exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where home construction is more expensive.
FHA Loan Relief
Loan servicers can provide some versatility on FHA loan requirements to those who have actually suffered a serious financial hardship or are having a hard time 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 rate 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 Corcoran CA?
The FHA makes it relatively simple to qualify for a mortgage loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve mortgages. However, lending companies can (and do) set standards that may be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Corcoran CA, you might have better luck with choosing another.
Note: you never know until you apply. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender in Corcoran 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 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 attests 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 lending institutions in Corcoran rather than the FHA itself, which just insures the loans. FHA-approved loan providers can have various rates and expenses, even for the same loan.
FHA loans are available through numerous sources– from the most significant banks and cooperative credit union to community banks and independent home loan lending institutions. Expenses, services and underwriting requirements differ among loan providers or home loan brokers, so it’s crucial to look around.
Discover more about how to discover low FHA home loan loan provider.