How To Qualify For FHA Loan in Glendale California (Humboldt County)
Looking for an FHA Loan in Glendale 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 FICO score can be between 500 – 579 if a 10% down payment is made. It’s significant 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 qualifications.
The FHA program was created in response to the rise of foreclosures and defaults that happened in 1930s; to provide lending companies with adequate insurance; and to help grow the housing market by making home loans more accessible and attainable for people with less than perfect credit or a low down payment due to FHA mortgage limits in Glendale, 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, lenders can, and do, offer FHA mortgages at beneficial mortgage loan interest 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 Glendale 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 loan.
Consumers 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 home loan is that it’s an assumable mortgage 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 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 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 adjusts 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 very little even on a worst case rate change.
About Glendale California
The area was long inhabited by the Tongva people (or “People of the Earth”), who were later renamed the Gabrieleños by the Spanish missionaries, after the nearby Mission San Gabriel Arcángel.
In 1798, José María Verdugo, a corporal in the Spanish army from Baja California, received the Rancho San Rafael from Governor Diego de Borica, formalizing his possession and use of land on which he had been grazing livestock and farming since 1784. Rancho San Rafael was a Spanish concession, of which 25 were made in California. Unlike the later Mexican land grants, the concessions were similar to grazing permits, with the title remaining with the Spanish crown.
In 1860, his grandson Teodoro Verdugo built the Catalina Verdugo Adobe, which is the oldest building in Glendale. The property is the location of the Oak of Peace, where early Californio leaders including Pio Pico met in 1847 and decided to surrender to Lieutenant Colonel John C. Frémont.
Verdugo’s descendants sold the ranch in various parcels, some of which are included in present-day Atwater Village, Eagle Rock, and Highland Park neighborhoods of Los Angeles.
In 1884, residents gathered to form a townsite and chose the name “Glendale”. It was bounded by First Street (now Lexington Drive) on the north, Fifth Street (now Harvard Street) on the south, Central Avenue on the west, and the Childs Tract on the east. Residents to the southwest formed “Tropico” in 1887.
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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 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 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 Loans
In addition to its popular FHA loan, the FHA likewise insures other loan programs provided by private lending institutions. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans help property buyers purchase a house– and refurbish it– all with a single mortgage. House owners can also utilize the program to re-finance their current home mortgage and include the expense of renovating jobs into the new loan. FHA 203( k) loans can be found in 2 types:
- The restricted 203( k) has a much easier application process, and the repair work or enhancements should total $35,000 or less.
- The standard 203( k) requires additional paperwork and applies to improvements costing more than $5,000, however the total value of the home should still fall within the FHA home mortgage limit for the location.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home loan and is also insured by the FHA. A HECM enables older property owners (aged 62 and up) with significant equity or those who own their houses outright to withdraw a portion of their home’s equity. The amount that will be available for withdrawal varies by borrower and depends upon the age of the youngest borrower or qualified non-borrowing spouse, existing rate of interest and the lesser of the home’s evaluated worth or the HECM FHA home mortgage limitation or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient home loans backed by the FHA permit homebuyers to buy houses that are currently energy effective, such as EnergyStar-certified buildings. Or they can be utilized to purchase and redesign 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 called the Graduated Payment Mortgage, this program is geared at borrowers whose earnings will increase in time. You begin with smaller month-to-month payments that gradually increase. 5 particular plans are readily available: 3 plans that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. 2 other plans 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 2023
For 2019, the flooring 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 limitations are referred to as “ceilings” and “floors” that FHA will insure. FHA updates restrict quantities each year in action to changing house prices.
FHA is required by law to adjust its quantities based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional mortgages 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 greater cost of living will have higher limitations, and vice versa. Special exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where house construction is more costly.
FHA Loan Relief
Loan servicers can use some flexibility on FHA loan requirements to those who have actually suffered a serious financial challenge or are struggling to make their payments.
That relief might be in the form of a temporary period of forbearance, a loan adjustment that would lower the rates of interest, extend the repayment 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 Glendale 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, lending companies can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Glendale CA, you might have better luck with 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 Glendale 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 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 home loans from FHA-approved lending institutions in Glendale instead of the FHA itself, which just insures the loans. FHA-approved lenders can have different rates and costs, even for the same loan.
FHA loans are available through lots of sources– from the greatest banks and cooperative credit union to community banks and independent home mortgage lending institutions. Costs, services and underwriting requirements vary amongst lending institutions or home loan brokers, so it’s essential to look around.
Learn more about how to find low FHA home loan loan provider.