How To Qualify For FHA Loan in Hayward California (Mariposa County)
Looking for an FHA Loan in Hayward 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 lower 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 rating 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 lenders with sufficient insurance; and to help stimulate the housing market by making home loans highly accessible and attainable for people with less than perfect credit or a low down payment due to FHA mortgage limits in Hayward, 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, 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
Typically an FHA loan in Hayward 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 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 popular option for their personal circumstances.
Another advantage of an FHA home loan is that it’s an assumable mortgage 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 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 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 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 process.
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 enable 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 minimal even on a worst case rate change.
About Hayward California
Human habitation of the greater East Bay, including Hayward, dates from at least 4000 BC. The most recent pre-European inhabitants of the Hayward area were the Native American Ohlone people.
In the 19th century, the land that is now Hayward became part of Rancho San Lorenzo, a Spanish land grant to Guillermo Castro, in 1841. The site of his home was on the former El Camino Viejo, or Castro Street (now Mission Boulevard) between C and D Streets, but the structure was severely damaged in the 1868 Hayward earthquake, with the Hayward Fault running directly under its location. Most of the city’s structures were destroyed in the earthquake, the last major earthquake on the fault. In 1930, that site was chosen for the construction of the City Hall, which served the city until 1969.
William Dutton Hayward arrived during the gold rush and “squatted” as he began to build a house next to the creek at the site of the old Polamares School. Guillermo Castro’s Vaqueros came by one day and told Hayward to get off of Castro’s property. William did leave, but went to Guillermo Castro directly and asked to buy a piece of his land. Castro sold him the area of what was east of Castro Street, now Mission Blvd. and the north side of A Street. William Hayward built a grand hotel on the property. He and his wife ran the hotel, which eventually burned to the ground around 1916.
Hayward was originally known as “Hayward’s”, then as “Haywood”, later as “Haywards”, and eventually as “Hayward”. There is some disagreement as to how it was named. Most historians believe it was named for William Dutton Hayward, who opened a hotel there in 1852. The U.S. Geological Survey Geographic Names Information System states the city was named after Alvinza Hayward, a millionaire from the California Gold Rush. Regardless of which Hayward the area was named for, the name was changed to “Haywood” when the post office was first established in 1860.
Castro emigrated to Chile with most of his family in 1864 after he lost his land in a card game. His name survives in the community of Castro Valley, located in the valley next to Hayward, which Castro used to pasture his cattle. The ranch was split up and sold to various locals, William Hayward among them. William Hayward’s fortunes took a turn for the grander when he constructed a resort hotel, which eventually grew to a hundred rooms. The surrounding area came to be called “Hayward’s” after the hotel.
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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 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 Loans
In addition to its popular FHA loan, the FHA also insures other loan programs offered by personal loan providers. Here’s a take 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. Homeowners can likewise use the program to refinance their current home mortgage and include the expense of remodeling 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 repairs or improvements must total $35,000 or less.
- The basic 203( k) needs additional paperwork and applies to enhancements costing more than $5,000, but the total value of the residential or commercial property must still fall within the FHA 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 homeowners (aged 62 and up) with considerable 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 customer and depends upon the age of the youngest debtor or qualified non-borrowing partner, present rates of interest and the lower of the house’s assessed value or the HECM FHA home loan limit or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient home loans backed by the FHA allow homebuyers to buy homes that are currently energy efficient, such as EnergyStar-certified structures. Or they can be used to buy and renovate 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 over time. You start with smaller month-to-month payments that slowly increase. 5 specific strategies are available: 3 strategies that allow 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 most 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 limits are referred to as “ceilings” and “floors” that FHA will insure. FHA updates limit amounts each year in action to changing house prices.
FHA is required by law to adjust its quantities based upon the loan limits set by the Federal Housing Finance Agency, or FHFA, for traditional home mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations vary according to the expense of living in a specific area, and can be different from one county to the next. Areas with a greater expense of living will have higher limits, and vice versa. Unique exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where home construction is more pricey.
FHA Loan Relief
Loan servicers can use some flexibility on FHA loan requirements to those who have actually suffered a major monetary difficulty 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 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 Hayward CA?
The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so mortgage lenders are more willing to approve mortgages. 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 Hayward CA, you might have better luck with shopping around for a better option.
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 Hayward to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the mortgage loan but these loans are geared towards lower income applicants. 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 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 demonstrates good credit history and a solid track record of timely payments will likely be eligible for the mortgage.
How to Find FHA Lenders
Debtors get their home loans from FHA-approved loan providers in Hayward instead of the FHA itself, which only insures the loans. FHA-approved lending institutions can have various rates and costs, even for the very same loan.
FHA loans are available through numerous sources– from the greatest banks and cooperative credit union to community banks and independent home loan lending institutions. Expenses, services and underwriting standards differ among lending institutions or home mortgage brokers, so it’s important to search.
Discover more about how to discover low FHA home mortgage lender.