How To Qualify For FHA Loan in Glendale Junction California (Los Angeles County)

How To Qualify For FHA Loan in Glendale Junction California (Los Angeles County)

Looking for an FHA Loan in Glendale Junction California?

An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA loans require more flexible minimum credit scores and down payments than many conventional loans.

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 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 rise of foreclosures and defaults that happened in 1930s; to provide mortgage companies with adequate insurance; and to help stimulate 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 Glendale Junction, 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 home loan payments.

Because of that insurance, mortgage lenders can, and do, offer FHA mortgages at really attractive 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.

Benefits of FHA Loans: Low Down Payments and Less Strict Credit Score Requirements

Typically an FHA loan in Glendale Junction 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 best option for their personal circumstances.

Another advantage of an FHA mortgage loan is that it’s an assumable mortgage 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.

>> CHECK FHA ELIGIBILITY NOW <<

(Or call 562-502-1502 to ask a local lender anything!)

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 Los Angeles 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 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 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.

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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 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 Los Angeles 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.

>> CHECK FHA ELIGIBILITY NOW <<

(Or call 562-502-1502 to ask a local lender anything!)

Types of FHA Mortgage Loans

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

  • FHA 203( k) loans – These FHA loans assist property buyers purchase a house– and refurbish it– all with a single home mortgage. Property owners can likewise use the program to re-finance their current home mortgage and include the expense of remodeling jobs into the brand-new loan. FHA 203( k) loans come in two types:
    • The limited 203( k) has a much easier application procedure, and the repairs or improvements must total $35,000 or less.
    • The basic 203( k) needs extra documents and applies to enhancements costing more than $5,000, but the total value of the property must still fall within the FHA home mortgage limitation for the location.
  • Home Equity Conversion Mortgage, or HECM – A HECM is the most popular kind of reverse mortgage and is likewise guaranteed by the FHA. A HECM enables older house 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 quantity that will be readily 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 assessed worth or the HECM FHA home loan limit or sales price.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient home loans backed by the FHA enable homebuyers to buy homes that are already energy effective, such as EnergyStar-certified buildings. Or they can be used to buy and renovate 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 referred to as the Graduated Payment Mortgage, this program is geared at borrowers whose incomes will increase with time. You begin with smaller sized month-to-month payments that gradually go up. Five particular strategies are offered: three strategies that permit five 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 each year.

FHA Loan Limits for 2022

For 2019, the floor 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 back. These limitations are referred to as “ceilings” and “floors” that FHA will insure. FHA updates restrict amounts each year in reaction to altering home prices.

FHA is needed by law to change its quantities based on the loan limits set by the Federal Housing Finance Agency, or FHFA, for standard home mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limits vary according to the expense of living in a certain location, and can be various from one county to the next. Areas with a greater cost of living will have higher limits, and vice versa. Unique exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building is more pricey.

FHA Loan Relief

Loan servicers can offer some flexibility on FHA loan requirements to those who have suffered a severe financial 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 lower the interest rate, extend the repayment period, 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 Junction CA?

The FHA makes it relatively easy to qualify for a mortgage. Again, the government guarantees the loan, so lenders are more willing to approve loans. However, lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Glendale Junction CA, you might have better luck with 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 Glendale Junction 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 attests 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 mortgage from FHA-approved loan providers in Glendale Junction instead of the FHA itself, which just guarantees the loans. FHA-approved lenders can have different rates and costs, even for the very same loan.

FHA loans are readily available through lots of sources– from the biggest banks and cooperative credit union to community banks and independent home loan loan providers. Costs, services and underwriting requirements vary among lenders or mortgage brokers, so it’s crucial to look around.

Find out more about how to discover the best FHA home loan lender.

>> CHECK FHA ELIGIBILITY NOW <<

(Or call 562-502-1502 to ask a local lender anything!)

Have Questions?

Let a local lender get you answers.
Call 562-502-1502 now!