How To Qualify For FHA Loan in Eel Rock California (Humboldt County)

How To Qualify For FHA Loan in Eel Rock California (Humboldt County)

Looking for an FHA Loan in Eel Rock 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 pay. 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 lending companies with sufficient insurance; and to help spark the housing market by making home loans more accessible and attainable for home-buyers with not so great credit or a low down payment due to FHA mortgage limits in Eel Rock, 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 mortgage payments.

Because of that insurance, mortgage companies can, and do, offer FHA home loans at really attractive 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

FHA Loan in Eel Rock

Typically an FHA loan in Eel Rock 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.

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 circumstances.

Another advantage of an FHA loan is that it’s an assumable home loan which means if you want to sell your home, 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 Humboldt 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 process.

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 permit 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 Eel Rock California

Other Cities You May Be Interested In

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 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 Humboldt 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 Loans

In addition to its popular FHA loan, the FHA also guarantees other loan programs offered by personal lenders. Here’s a look at each of them.

  • FHA 203( k) loans – These FHA loans help homebuyers acquire a home– and renovate it– all with a single home loan. Property owners can likewise utilize the program to refinance their current home mortgage and add the cost of renovating tasks into the new loan. FHA 203( k) loans come in 2 types:
    • The limited 203( k) has an easier application process, and the repairs or enhancements must amount to $35,000 or less.
    • The basic 203( k) needs extra documentation and applies to improvements costing more than $5,000, however the total worth of the residential or commercial property need to still fall within the FHA home mortgage limit for the location.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse mortgage and is likewise insured by the FHA. A HECM permits older house owners (aged 62 and up) with considerable equity or those who own their houses outright to withdraw a portion of their home’s equity. The quantity that will be available for withdrawal varies by borrower and depends on the age of the youngest borrower or qualified non-borrowing spouse, current interest rates and the lesser of the house’s appraised worth or the HECM FHA home loan limit or list prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA enable homebuyers to buy homes that are currently energy efficient, such as EnergyStar-certified structures. 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 deposit.
  • FHA Section 245( a) loan – Also called the Graduated Payment Mortgage, this program is geared at debtors whose earnings will increase in time. You start with smaller monthly payments that gradually increase. 5 specific plans are offered: three plans that enable 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. 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 limit for FHA loans in most of the country 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 described as “ceilings” and “floorings” that FHA will guarantee. FHA updates restrict quantities each year in action to altering house rates.

FHA is required by law to adjust its quantities based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for conventional home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations vary according to the cost of living in a certain location, and can be different from one county to the next. Locations with a higher cost of living will have higher limitations, and vice versa. Special exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where home building is more costly.

FHA Loan Relief

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

That relief might be in the form of a short-term duration of forbearance, a loan modification that would reduce the rates of interest, extend the payback duration, 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 Eel Rock 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 loans. However, mortgage companies can (and do) set standards that may be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Eel Rock CA, you might have better luck with looking around for 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 Eel Rock 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 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 proves 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 loans from FHA-approved lenders in Eel Rock instead of the FHA itself, which only insures the loans. FHA-approved lenders can have different rates and expenses, even for the same loan.

FHA loans are offered through numerous sources– from the most significant banks and cooperative credit union to neighborhood banks and independent home loan lending institutions. Expenses, services and underwriting requirements differ among loan providers or home mortgage brokers, so it’s important to shop around.

Discover more about how to discover low FHA mortgage lender.


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