How To Qualify For FHA Loan in Fortuna California (Humboldt County)
Looking for an FHA Loan in Fortuna California?
FHA loans have been a flexible home loan program that’s been around since the 1930’s and is protected 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 score can be between 500 – 579 if a 10% down payment is made. It’s crucial to remember though, that the lower the credit rating, 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 requirements.
The FHA program was created in response to the increase of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help spark 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 Fortuna, 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 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
Typically an FHA loan in Fortuna 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 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 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 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 vigorous with respect to gifts for down-payment. Very few 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 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 adjusts 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 minimal even on a worst case rate change.
About Fortuna California
The settlement was originally called “Slide,” for Slide Hill, in 1874, named for the slide that was a fixture on the northeast side of the Eel River and the southwest portion of Christian Ridge just to the northwest, near the edge of town. In 1875, the name was changed to Springville during the construction of the Springville Mill, a lumber mill for the nearby redwood forests, named so because of the numerous springs in the area. The mill’s owners were Henry Rohner (namesake of neighboring Rohnerville), Alexander Masson, M. N. Weber and G. F. Gushaw. Springville was originally a company town belonging to the mill, and the few people that resided there all worked at the mill. By the late 1870s Springville had grown enough to warrant a post office, but a town called Springville, California (now part of Camarillo, in Ventura County) already existed in the state. The post office was named Slide on May 24, 1876. In 1884 the residents petitioned the state legislature for the name Fortuna, Spanish for “fortune” and Latin for “chance,” and by July 3, 1888, the change was official. The name was chosen when settlers saw the proximity of the forests, the river and its valley, and the Pacific Ocean, as ideal for enjoying a good quality of life, and felt “fortunate” to live there. It is believed that a local minister and real estate agent, desiring to sell lots to newcomers, devised the name as a marketing tool.
Electricity came to Fortuna in 1883 when W. J. Swortzel and George W. Williams (of Swortzel & Williams), owners of the Springville Mill Company, built a $4,000 power plant. Some of the local sawmills were already powered by electricity, and by providing power to the mills, Swortzel and Williams saw the opportunity to also provide inexpensive electric lighting to the townspeople.
The town was incorporated on February 20, 1906, and, because of the Eel River, became known for its agricultural prowess in vegetable crops, berries and fruits, and for the fresh fish from the river. Although agricultural industry was expanding, the lumber industry is what started the town, and would continue as the main source of local income for some time to come.
Rohnerville (formerly Eel River Township), a town founded to service the many gold miners inhabiting the mountains to the north and east, was competing with Fortuna to be the leading township in the area. The miners would come by ship to Eureka, and then head up the Eel River to the junction with the Van Duzen River, from whence the miners headed east up the Van Duzen River Valley into Trinity County. Rohnerville was at this junction, and looked to prosper from selling supplies to the miners. But when it was decided that the railroad would be routed through neighboring Fortuna, it set the fate of both towns.
The Eel River and Eureka Railroad was built in 1884 to provide Humboldt Bay shipping access to the lumber mills and farms of the lower Eel River. Atchison, Topeka and Santa Fe Railway reorganized Fortuna’s railroad as the San Francisco and Northwestern Railway in 1903, and then completed the Northwestern Pacific Railroad to San Francisco in 1914. Fortuna became the rail hub for smaller communities like Alton, Fernbridge, Ferndale, Hydesville, Newburg, Port Kenyon, Rohnerville, and Waddington. Fortuna was the location of one of two secondary mills of the storied Pacific Lumber Company, headquartered ten miles (16 km) south in Scotia.
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 mortgage or to buy the property. 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!)
Kinds Of FHA Home Loans
In addition to its popular FHA loan, the FHA also insures other loan programs used by private loan providers. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers purchase a home– and remodel it– all with a single home mortgage. Property owners can also use the program to refinance their current home loan and include the expense of renovating jobs into the new loan. FHA 203( k) loans come in 2 types:
- The minimal 203( k) has an easier application process, and the repairs or improvements must total $35,000 or less.
- The standard 203( k) requires additional documents and applies to enhancements costing more than $5,000, however the total worth of the home must still fall within the FHA mortgage limitation for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse mortgage and is also insured by the FHA. A HECM permits older homeowners (aged 62 and up) with significant equity or those who own their homes outright to withdraw a part of their house’s equity. The quantity that will be readily available for withdrawal varies by borrower and depends on the age of the youngest borrower or qualified non-borrowing partner, current rates of interest and the lesser of the house’s assessed value or the HECM FHA mortgage limit or list prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA enable homebuyers to buy homes that are already energy effective, such as EnergyStar-certified structures. Or they can be utilized to buy and redesign older houses with energy-efficient, or “green,” updates and roll the expenses of the upgrades into the loan without a larger deposit.
- FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is tailored at debtors whose earnings will increase with time. You start out with smaller month-to-month payments that gradually increase. Five particular plans are readily available: three plans that permit 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. Two other strategies 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 2022
For 2019, the flooring limitation for FHA loans in the majority 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 limitations are referred to as “ceilings” and “floors” that FHA will insure. FHA updates limit amounts each year in response to altering home rates.
FHA is required by law to change its amounts based upon the loan limits set by the Federal Housing Finance Agency, or FHFA, for standard home loans ensured or owned by Fannie Mae and Freddie Mac. Ceiling and floor limits vary according to the expense of living in a specific location, and can be different from one county to the next. Areas with a greater expense of living will have greater limitations, and vice versa. Unique exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building and construction is more costly.
FHA Loan Relief
Loan servicers can use some flexibility on FHA loan requirements to those who have suffered a serious financial 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 decrease the interest rate, extend the payback 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 Fortuna CA?
The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so mortgage lenders are more willing to approve home loans. However, mortgage lenders can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Fortuna 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 Fortuna 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 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 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 proves 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 mortgage from FHA-approved lenders in Fortuna instead of the FHA itself, which just guarantees the loans. FHA-approved lenders can have various rates and expenses, even for the very same loan.
FHA loans are available through lots of sources– from the biggest banks and cooperative credit union to neighborhood banks and independent home mortgage loan providers. Expenses, services and underwriting standards differ among loan providers or mortgage brokers, so it’s crucial to search.
Discover more about how to discover low FHA mortgage lender.