How To Qualify For FHA Loan in Corona California (Riverside County)
Looking for an FHA Loan in Corona California?
An FHA loan is a home loan that’s insured by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA loans require flexible 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 worthiness, 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 qualifications.
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 spark the housing market by making home loans much more accessible and attainable for people with less than perfect credit or a low down payment due to FHA mortgage limits in Corona, 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, lenders can, and do, offer FHA home loans at beneficial 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 Corona 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 home 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 scenario.
Another advantage of an FHA home loan is that it’s an assumable home 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 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 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 changes 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 modification. This insures that the payment adjustment will be minimal even on a worst case rate change.
About Corona California
Corona is Spanish for crown or wreath. Originally called South Riverside, citizens wanted to distinguish their city from the larger city of Riverside to the north. When it came time to incorporate the city a number of different names were considered, but the name Corona was chosen to play upon a unique feature of the city, the one-mile diameter drive that circled the center of the town.
Corona was founded at the height of the Southern California citrus boom in 1886, and is situated at the upper end of the Santa Ana River Canyon, a significant pass through the Santa Ana Mountains. The town of Corona was once the “Lemon Capital of the World”. A museum there presents the lemon’s former role in the local economy. The city derived its name (and its nickname, “The Circle City”) from the unique layout of its streets, with a standard grid enclosed by the circular Grand Boulevard, 2.75 miles (4.43 km) in circumference. The street layout was designed by Hiram Clay Kellogg, a civil engineer from Anaheim who was an influential figure in the early development of Orange County.
Corona was established as a town by the South Riverside Land and Water Company. The company was incorporated in 1886; founding members included ex-Governor of Iowa Samuel Merrill, R.B. Taylor, George L. Joy, A.S. Garretson, and Adolph Rimpau. Originally a citrus growers’ organization, it purchased the lands of Rancho La Sierra of Bernardo Yorba, and the Rancho Temescal grant and the colony of South Riverside was laid out. They also secured the water rights to Temescal Creek, its tributaries and Lee Lake. Dams and pipelines were built to carry the water to the colony. In 1889, the Temescal Water Company was incorporated, to supply water for the new colony. This company purchased all the water-bearing lands in the Temescal valley and began drilling artesian wells.
Originally located in San Bernardino County, the city was named “South Riverside” and received its post office in that name on either May 27 or August 11, 1887 with Charles H. Cornell as the town’s first postmaster. In 1893, South Riverside became part of the new Riverside County. In 1896, the city was renamed “Corona” for its circular Grand Boulevard, where three international automobile races were held in 1913, 1914 and 1916.
The city of Corona has been popular among celebrities drawn to its upscale areas and relative privacy compared to Los Angeles. Lucille Ball and Desi Arnaz spent time at their ranch, located in north Corona, and played golf often at the Cresta Verde Golf Course in the northeastern section of the city. After their divorce, Mr. Arnaz continued to live in Corona.
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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 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!)
Kinds Of FHA Loans
In addition to its popular FHA loan, the FHA also guarantees other loan programs offered by personal lending institutions. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans help property buyers purchase a house– and remodel it– all with a single home mortgage. House owners can also utilize the program to refinance their current mortgage and add the cost of renovating tasks into the brand-new loan. FHA 203( k) loans come in two types:
- The restricted 203( k) has a simpler application procedure, and the repairs or enhancements must amount to $35,000 or less.
- The basic 203( k) requires additional documentation and applies to enhancements costing more than $5,000, but the overall value of the residential or commercial property should still fall within the FHA mortgage limitation for the location.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home mortgage and is also insured 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 portion of their house’s equity. The amount that will be readily available for withdrawal varies by debtor and depends upon the age of the youngest customer or eligible non-borrowing partner, present rates of interest and the lesser of the home’s appraised worth or the HECM FHA mortgage limitation or list prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA enable homebuyers to buy houses that are already energy effective, such as EnergyStar-certified structures. Or they can be utilized to purchase and renovate older homes with energy-efficient, or “green,” updates and roll the expenses of the upgrades into the loan without a bigger deposit.
- FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is geared at debtors whose earnings will increase gradually. You start out with smaller sized regular monthly payments that gradually go up. Five particular plans are offered: three strategies that enable 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. 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 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 back. These limits are referred to as “ceilings” and “floors” that FHA will guarantee. FHA updates limit quantities each year in action to changing house rates.
FHA is needed by law to change its quantities based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for standard home mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and floor limits differ according to the cost of living in a particular area, and can be different from one county to the next. Areas with a greater 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 house building and construction is more pricey.
FHA Loan Relief
Loan servicers can provide some flexibility on FHA loan requirements to those who have actually suffered a severe financial hardship or are struggling to make their payments.
That relief might be in the form of a short-term duration of forbearance, a loan adjustment that would lower the interest rate, extend the repayment period, or postpone 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 Corona CA?
The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so lending companies are more willing to approve home loans. However, lenders can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Corona CA, you might have better luck with looking around for 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 Corona 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 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 demonstrates 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 loan providers in Corona rather than the FHA itself, which only guarantees the loans. FHA-approved lenders can have different rates and expenses, even for the exact same loan.
FHA loans are readily available through lots of sources– from the most significant banks and cooperative credit union to neighborhood banks and independent home loan loan providers. Expenses, services and underwriting standards differ amongst lenders or mortgage brokers, so it’s crucial to shop around.
Find out more about how to find low FHA mortgage loan provider.