How To Qualify For FHA Loan in Holtville California (Imperial County)

How To Qualify For FHA Loan in Holtville California (Imperial County)

Looking for an FHA Loan in Holtville 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 credit score can be between 500 – 579 if a 10% down payment is made. It’s crucial 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 lenders with sufficient insurance; and to help spark the housing market by making mortgages much more accessible and attainable for consumers with less than stellar credit or a low down payment due to FHA mortgage limits in Holtville, 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, lenders can, and do, offer FHA mortgages at really attractive mortgage 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 Holtville

Typically an FHA loan in Holtville 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.

Borrowers 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 scenario.

Another advantage of an FHA mortgage loan is that it’s an assumable 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 Imperial 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 loan programs will allow 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 process.

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 modification. This insures that the payment adjustment will be very little even on a worst case rate change.

About Holtville California

The city was founded in the 1880s by Swiss-German settlers, many of whom entered from Mexico. The construction of railroads in the 1890s, the All-American Canal in the late 1940s, and U.S. Route 80 in the 1920s (later converted to Interstate 8 in the 1970s) and the North American Free Trade Agreement (NAFTA) economic boom in the 1990s brought more people to Holtville and the Imperial Valley.

The city of Holtville, which was originally called Holton, was founded in 1903 by W.F. Holt, and incorporated on June 20, 1908. The name was changed to Holtville due to a request by the U. S. Postal Service because the name Holton sounded too much like Colton (in San Bernardino County), the regional headquarters of the Southern Pacific Railroad at the time. The name honors W.F. Holt, founder of the community.

The city lies on the northeast bank of the Alamo River, one of two rivers that flow north from Mexico into Imperial County.

On March 2, 2021, 13 people were killed just outside of town when an SUV carrying 25 people collided with a semi-truck and trailer.

According to the United States Census Bureau, the city has a total area of 1.1 sq mi (2.8 km), with 1.1 square miles land and 0.40% water.

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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 Imperial 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 Mortgage Loans

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

  • FHA 203( k) loans – These FHA loans help property buyers acquire a house– and remodel it– all with a single home mortgage. Homeowners can also utilize the program to refinance their existing home mortgage and include the expense of redesigning tasks into the new loan. FHA 203( k) loans been available in 2 types:
    • The restricted 203( k) has an easier application procedure, and the repairs or enhancements should amount to $35,000 or less.
    • The basic 203( k) needs extra paperwork and applies to improvements costing more than $5,000, but the total worth 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 likewise guaranteed by the FHA. A HECM enables older property owners (aged 62 and up) with substantial equity or those who own their houses outright to withdraw a part of their house’s equity. The quantity that will be offered for withdrawal varies by borrower and depends upon the age of the youngest customer or eligible non-borrowing spouse, present interest rates and the lower of the house’s appraised value or the HECM FHA home loan limit or list prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA allow property buyers to buy homes that are already energy efficient, such as EnergyStar-certified buildings. Or they can be utilized to purchase and renovate older houses with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a larger deposit.
  • FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is tailored at customers whose incomes will increase in time. You start out with smaller monthly payments that slowly increase. Five specific strategies are offered: three plans 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 yearly.

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FHA Loan Limits for 2023

For 2019, the floor limitation for FHA loans in the majority 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 earlier. These limits are described as “ceilings” and “floors” that FHA will insure. FHA updates limit quantities each year in reaction to altering house costs.

FHA is required by law to adjust its amounts based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limits differ according to the expense of living in a particular area, and can be different from one county to the next. Locations with a higher cost of living will have higher limitations, and vice versa. Unique exceptions are produced 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 flexibility on FHA loan requirements to those who have suffered a serious financial challenge 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 adjustment that would reduce 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 Holtville CA?

The FHA makes it relatively easy to qualify for a mortgage loan. Again, the government guarantees the loan, so lending companies are more willing to approve mortgage 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 Holtville 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 Holtville 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 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 proves good credit history and a solid track record of timely payments will likely be eligible for the home loan.

How to Find FHA Lenders

Customers get their home mortgage from FHA-approved lending institutions in Holtville rather than the FHA itself, which only insures the loans. FHA-approved lenders can have different rates and expenses, even for the exact same loan.

FHA loans are available through numerous sources– from the biggest banks and credit unions to community banks and independent home loan loan providers. Expenses, services and underwriting requirements differ amongst loan providers or mortgage brokers, so it’s essential to shop around.

Learn more about how to discover low FHA home loan lending institution.


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