How To Qualify For FHA Loan in Dixon California (Solano County)
Looking for an FHA Loan in Dixon California?
FHA loans have been a flexible home loan program that’s been around since the 1930’s and is 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 FICO 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 increase of foreclosures and defaults that happened in 1930s; to provide lenders with sufficient insurance; and to help grow the housing market by making mortgages much more accessible and attainable for home-buyers with less than stellar credit or a low down payment due to FHA mortgage limits in Dixon, 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 Dixon 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.
Borrowers 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 mortgage is that it’s an assumable home 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 Solano 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 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 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 time frame. 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 very little even on a worst case rate change.
About Dixon California
The first semi-permanent European settlement to develop in the (now) Dixon area emerged during the California Gold Rush of the mid-19th century. During this time, the community of Silveyville was founded as a halfway point between the Pacific coast and the rich gold fields of Sacramento—along a route commonly traveled by miners. In 1868, Central Pacific railroad came through the area and missed Silveyville by a few miles. As a result, local leaders decided to physically relocate Silveyville closer to the tracks in order to enjoy the benefits of commerce and travel. One of the first buildings that still stands in Dixon from the 1871 move is the Dixon Methodist Church located at 209 N. Jefferson Street.
Originally, the city was named “Dicksville” after Thomas Dickson who donated 10 acres of his land for the construction of a railroad depot following the completion of the tracks and subsequent relocation of Silveyville to the now-Dixon area. However, when the first rail shipment of merchandise arrived from San Francisco in 1872, it was mistakenly addressed to “Dixon”—a name that has been used since, mainly out of simplicity. Up to now, the urban landscape of the town can be seen to have developed mostly in between the railroad tracks and Interstate-80.
The current city council consists of Mayor Steven C. Bird, Vice-Mayor Jim Ernest, City Councilmembers Scott Pederson, Don Hendershot, and Kevin Johnson. Bird, prior to be elected Mayor in November 2020, was on the City Council for 2-previous terms. Pederson is serving a 2nd Term (first elected in 2014) and Ernest who was elected in 2018. Hendershot and Johnson are the newest members to the Dixon City Council, elected in 2020.
The city operates a municipal police and fire department, and water system & wastewater treatment plant.
Dixon was the home of the Gymboree Corporation’s only Distribution Center prior to the bankruptcy and closing of the company.
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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 Solano 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 also insures other loan programs offered by private lending institutions. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans assist property buyers acquire a house– and refurbish it– all with a single mortgage. Homeowners can also use the program to re-finance their current home loan and include the expense of remodeling tasks into the brand-new loan. FHA 203( k) loans been available in two types:
- The limited 203( k) has an easier application procedure, and the repair work or improvements must amount to $35,000 or less.
- The standard 203( k) requires extra documents and applies to improvements costing more than $5,000, but the overall worth of the residential or commercial property need to still fall within the FHA home mortgage limit for the location.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home mortgage and is likewise guaranteed by the FHA. A HECM permits older homeowners (aged 62 and up) with considerable equity or those who own their houses outright to withdraw a part of their house’s equity. The amount that will be offered for withdrawal differs by debtor and depends on the age of the youngest debtor or eligible non-borrowing spouse, current rate of interest and the lesser of the house’s evaluated value or the HECM FHA home loan limit or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home loans backed by the FHA permit homebuyers to acquire houses that are already energy efficient, such as EnergyStar-certified structures. Or they can be utilized to buy and remodel older houses with energy-efficient, or “green,” updates and roll the costs 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 geared at debtors whose incomes will increase over time. You start out with smaller sized regular monthly payments that slowly go up. 5 particular plans are offered: three strategies that enable five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent each year. Two other strategies set payment increases 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 2022
For 2019, the floor 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 back. These limits are described as “ceilings” and “floors” that FHA will guarantee. FHA updates limit amounts each year in reaction to altering house prices.
FHA is required by law to change its quantities based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for conventional mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations differ according to the cost of living in a specific location, and can be different from one county to the next. Areas with a higher expense of living will have higher limitations, and vice versa. Unique exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where house construction is more pricey.
FHA Loan Relief
Loan servicers can use some versatility on FHA loan requirements to those who have actually suffered a severe monetary difficulty 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 reduce the rate of interest, extend the repayment duration, 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 Dixon CA?
The FHA makes it relatively simple to qualify for a home loan. Again, the government guarantees the loan, so lenders are more willing to approve mortgages. However, mortgage companies can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Dixon 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 Dixon 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 fortunate 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 guidelines 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 shows good credit history and a solid track record of timely payments will likely be eligible for the home loan.
How to Find FHA Lenders
Debtors get their home loans from FHA-approved loan providers in Dixon rather than the FHA itself, which only insures the loans. FHA-approved loan providers can have various rates and costs, even for the same loan.
FHA loans are readily available through numerous sources– from the biggest banks and credit unions to neighborhood banks and independent mortgage loan providers. Costs, services and underwriting standards vary amongst lending institutions or mortgage brokers, so it’s important to look around.
Discover more about how to find low FHA mortgage loan provider.