How To Qualify For FHA Loan in Granite Springs California (Mariposa County)
Looking for an FHA Loan in Granite Springs California?
An FHA loan is a home loan that’s insured by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA mortgages 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 credit score can be between 500 – 579 if a 10% down payment is made. It’s significant to remember though, that the lower the credit score, 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 lending companies 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 Granite Springs, 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 mortgage payments.
Because of that insurance, mortgage companies can, and do, offer FHA mortgages at beneficial 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 Granite Springs 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.
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 scenario.
Another advantage of an FHA mortgage 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 Mariposa 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 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 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 modification. This insures that the payment adjustment will be minimal even on a worst case rate change.
About Granite Springs California
Granite Springs is an unincorporated community in Mariposa County, California. It is located 3 miles (4.8 km) southwest of Penon Blanco Peak, at an elevation of 1417 feet (432 m).
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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 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 Mariposa 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 Home Loans
In addition to its popular FHA loan, the FHA also guarantees other loan programs offered by personal lending institutions. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans help property buyers buy a house– and renovate it– all with a single home loan. Property owners can likewise use the program to re-finance their current mortgage and include the cost of renovating projects into the new loan. FHA 203( k) loans can be found in two types:
- The minimal 203( k) has a much easier application process, and the repair work or improvements must amount to $35,000 or less.
- The basic 203( k) needs extra paperwork 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.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home mortgage and is likewise insured by the FHA. A HECM enables older house owners (aged 62 and up) with considerable equity or those who own their homes outright to withdraw a portion of their home’s equity. The quantity that will be available for withdrawal differs by debtor and depends upon the age of the youngest borrower or qualified non-borrowing spouse, existing rates of interest and the lesser of the house’s appraised value or the HECM FHA home mortgage limit or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home loans backed by the FHA permit property buyers to buy houses that are currently energy effective, such as EnergyStar-certified structures. Or they can be used to purchase and renovate older houses with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a bigger deposit.
- FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is tailored at debtors whose incomes will increase gradually. You start with smaller sized regular monthly payments that slowly go up. 5 specific plans are offered: 3 strategies that permit 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. 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 floor limit for FHA loans in the majority of the nation is $314,827, up from $294,515 in 2018. For high-cost locations, the ceiling is $726,525, up from $679,650 a year ago. These limitations are referred to as “ceilings” and “floors” that FHA will insure. FHA updates restrict quantities each year in response to changing house rates.
FHA is needed by law to adjust its quantities based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for standard mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations vary according to the cost of living in a certain area, and can be different from one county to the next. Areas with a greater cost of living will have greater limits, and vice versa. Special exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where house building and construction is more expensive.
FHA Loan Relief
Loan servicers can provide some versatility on FHA loan requirements to those who have actually suffered a severe financial hardship or are struggling to make their payments.
That relief might be in the form of a short-lived period of forbearance, a loan adjustment that would reduce the interest rate, 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 Granite Springs CA?
The FHA makes it relatively easy to qualify for a mortgage. Again, the government guarantees the loan, so lending companies are more willing to approve loans. However, lending companies can (and do) set standards that may be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Granite Springs CA, you might have better luck with choosing 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 Granite Springs 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 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 demonstrates good credit history and a solid track record of timely payments will likely be eligible for the home loan.
How to Find FHA Lenders
Borrowers get their home loans from FHA-approved lenders in Granite Springs instead of the FHA itself, which only insures the loans. FHA-approved loan providers can have various rates and expenses, even for the very same loan.
FHA loans are readily available through many sources– from the biggest banks and cooperative credit union to neighborhood banks and independent home loan lending institutions. Expenses, services and underwriting standards vary amongst lenders or mortgage brokers, so it’s crucial to search.
Learn more about how to discover low FHA home loan lending institution.