How To Qualify For FHA Loan in Cressey California (Merced County)
Looking for an FHA Loan in Cressey California?
An FHA loan is a mortgage 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 significant 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 requirements.
The FHA program was created in response to the rise of foreclosures and defaults that happened in 1930s; to provide lending companies with sufficient insurance; and to help grow the housing market by making mortgages more accessible and attainable for people with less than perfect credit or a low down payment due to FHA mortgage limits in Cressey, 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 mortgage payments.
Because of that insurance, mortgage companies 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 Cressey 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 circumstances.
Another advantage of an FHA 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 Merced 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 home loan programs will enable 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 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 Cressey California
The Cressy post office opened in 1882, closed in 1883, re-opened in 1909, and changed its name to Cressey in 1912. The town was named by the Atchison, Topeka and Santa Fe Railway for Calvin J. Cressey, local landowner.
Cressey has one Postal Office, located on Cressey Way. The Old Post Office was located behind the Cressey General Store, on Third St.
Cressey has one active General Store, located on the corner of Santa Fe Dr. and Third St. In the past, the Cressey Store had two Gasoline Pumps; then was reduced to one. Then after, all were taken out of service and removed.
Cressey has one county-owned Park, located on Cressey Way, just west of the Ward Canal, but it’s said to be maintained by a few citizens and the Cal-Fire Firefighter Volunteers.
Cressey was also said to have one church (but later turned into a private home) on the corner of Crocker Ave and Third St. It was also said that Cressey had a Hotel near the RailRoad (Santa Fe) but has not been confirmed.
Cressey had an Old “one-lane” iron suspension bridge (similar to the Historic Shaffer Bridge), that was off of Meadow Dr, that went over the Merced River. That bridge was a “cut-off” or an alternate way to Ballico, CA; that went onto Alves Rd. The bridge was later demolished after multiple injuries sustained by kids jumping off into the water.
Cressey is patrolled by the Merced County Sheriffs Office.
Cressey has one Elementary School (Ballico-Cressey School District, K-2).
According to the United States Census Bureau, the CDP covers an area of 1.8 square miles (4.6 km), all of it land.
To the North of Cressey, beyond the Merced River, it is considered Ballico, Ca.
To the South of Cressey, Palm Ave and Beyond, it is considered Winton, Ca.
To the West of Cressey, over the Santa Fe Rail Road and beyond, it is considered Livingston, Ca.
To the East of Cressey, off of Cressey Way onto Meadow Dr and beyond, it is considered Winton, Ca as well.
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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 mortgage 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 Merced 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 Home Loans
In addition to its popular FHA loan, the FHA likewise guarantees other loan programs provided by personal loan providers. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans help property buyers buy a home– and refurbish it– all with a single home mortgage. Homeowners can also utilize the program to refinance their current mortgage and add the expense of remodeling jobs into the new loan. FHA 203( k) loans come in 2 types:
- The restricted 203( k) has a much easier application process, and the repair work or improvements need to total $35,000 or less.
- The basic 203( k) requires additional documentation and applies to improvements costing more than $5,000, but the total worth of the home must still fall within the FHA home mortgage limit for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse mortgage and is likewise guaranteed by the FHA. A HECM permits older property owners (aged 62 and up) with substantial equity or those who own their homes outright to withdraw a part of their home’s equity. The quantity that will be available for withdrawal varies by borrower and depends upon the age of the youngest borrower or qualified non-borrowing partner, existing rate of interest and the lesser of the home’s appraised value or the HECM FHA mortgage limitation or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA allow property buyers to purchase homes that are already energy efficient, such as EnergyStar-certified buildings. Or they can be used to purchase and redesign older houses with energy-efficient, or “green,” updates and roll the expenses of the upgrades into the loan without a bigger down payment.
- FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is tailored at borrowers whose incomes will increase gradually. You start with smaller sized regular monthly payments that gradually go up. Five specific strategies are available: three plans that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. Two other strategies 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 flooring limitation 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 limits are referred to as “ceilings” and “floors” that FHA will insure. FHA updates restrict amounts each year in action to altering house costs.
FHA is needed by law to change its quantities based on the loan limits set by the Federal Housing Finance Agency, or FHFA, for traditional home loans ensured or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations vary according to the expense of living in a particular location, and can be various from one county to the next. Areas with a higher expense of living will have greater limitations, and vice versa. Special exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where home building is more expensive.
FHA Loan Relief
Loan servicers can use some flexibility on FHA loan requirements to those who have suffered a serious monetary difficulty or are struggling to make their payments.
That relief might be in the form of a short-lived duration of forbearance, a loan modification that would decrease the rates 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 Cressey CA?
The FHA makes it relatively easy to qualify for a mortgage loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve loans. However, lending companies can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Cressey CA, you might have better luck with looking around for 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 Cressey to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the mortgage 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 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
Borrowers get their home mortgage from FHA-approved loan providers in Cressey instead of the FHA itself, which just insures the loans. FHA-approved lending institutions can have different rates and costs, even for the same loan.
FHA loans are offered through many sources– from the most significant banks and credit unions to community banks and independent home loan lenders. Expenses, services and underwriting standards vary amongst lending institutions or mortgage brokers, so it’s crucial to shop around.
Find out more about how to find low FHA mortgage lender.