How To Qualify For FHA Loan in Hilmar-Irwin California (Merced County)

How To Qualify For FHA Loan in Hilmar-Irwin California (Merced County)

Looking for an FHA Loan in Hilmar-Irwin California?

FHA loans have been a flexible home loan program that’s been around since the 1930’s and is 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 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 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 qualifications.

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 grow the housing market by making home loans more accessible and affordable for consumers with not so great credit or a low down payment due to FHA mortgage limits in Hilmar-Irwin, 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, 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.


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

FHA Loan in Hilmar-Irwin

Typically an FHA loan in Hilmar-Irwin 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 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 mortgage is that it’s an assumable loan 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 Merced 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 changes 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 Hilmar-Irwin California

Hilmar-Irwin is located at 37°24′30″N 120°51′3″W / 37.40833°N 120.85083°W / 37.40833; -120.85083, west of Delhi and Livingston and south of Turlock.

According to the United States Census Bureau, the CDP has a total area of 3.9 square miles (10 km), all of it land.

It is home to the Hilmar Cheese Company, a cheese manufacturer that offers public tours.

Hilmar-Irwin has hot, mostly dry summers and cool, wet winters. Average January temperatures are a maximum of 54.0 °F (12.2 °C) and a minimum of 40.0 °F (4.4 °C).

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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 home loan 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 Merced 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 guarantees other loan programs used by private lenders. Here’s a look at each of them.

  • FHA 203( k) loans – These FHA loans help homebuyers buy a home– and remodel it– all with a single home loan. Homeowners can also use the program to re-finance their existing home mortgage and add the cost of redesigning projects into the brand-new loan. FHA 203( k) loans can be found in 2 types:
    • The limited 203( k) has a much easier application process, and the repairs or improvements should total $35,000 or less.
    • The basic 203( k) needs extra documents and applies to improvements costing more than $5,000, but the total value of the home must still fall within the FHA mortgage limit for the location.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home mortgage and is likewise guaranteed by the FHA. A HECM permits older homeowners (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 offered for withdrawal varies by debtor and depends upon the age of the youngest customer or qualified non-borrowing partner, current interest rates and the lower of the house’s evaluated worth or the HECM FHA home loan limitation or sales price.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient home loans backed by the FHA permit property buyers to purchase homes that are already energy efficient, such as EnergyStar-certified structures. Or they can be used to buy and remodel older homes with energy-efficient, or “green,” updates and roll the expenses of the upgrades into the loan without a bigger down payment.
  • FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is geared at borrowers whose earnings will increase over time. You begin with smaller regular monthly payments that slowly increase. 5 specific strategies are readily available: three plans that enable five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. Two other plans set payment boosts over 10 years at 2 percent and 3 percent yearly.

(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 locations, the ceiling is $726,525, up from $679,650 a year back. These limits are referred to as “ceilings” and “floorings” that FHA will guarantee. FHA updates restrict quantities each year in action to altering 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 conventional mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations differ according to the cost 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 greater limits, and vice versa. Special exceptions are produced real estate in Alaska, Hawaii, Guam and the Virgin Islands, where home construction is more costly.

FHA Loan Relief

Loan servicers can offer some flexibility on FHA loan requirements to those who have actually suffered a severe monetary hardship or are having a hard time to make their payments.

That relief might be in the form of a temporary duration of forbearance, a loan modification that would decrease the interest rate, extend the repayment period, or delay 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 Hilmar-Irwin 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 are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Hilmar-Irwin 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 Hilmar-Irwin 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 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 qualifications 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 shows 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 home loans from FHA-approved lending institutions in Hilmar-Irwin rather than the FHA itself, which only insures the loans. FHA-approved lending institutions can have different rates and costs, even for the very same loan.

FHA loans are offered through numerous sources– from the most significant banks and cooperative credit union to community banks and independent home mortgage lending institutions. Costs, services and underwriting standards vary amongst lenders or mortgage brokers, so it’s crucial to shop around.

Find out more about how to find low FHA mortgage lending institution.


(Or call 213-474-7389 to ask a local lender anything!)