How To Qualify For FHA Loan in Kernville California (Kern County)
Looking for an FHA Loan in Kernville 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). Popular with first-time home-buyers, FHA mortgages require 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 rating can be between 500 – 579 if a 10% down payment is made. It’s important to remember though, that the lower the credit worthiness, 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 mortgage companies with sufficient insurance; and to help grow the housing market by making home loans highly accessible and affordable for people with less than perfect credit or a low down payment due to FHA mortgage limits in Kernville, 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 mortgages at beneficial 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.
(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 Kernville 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 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 home loan is that it’s an assumable mortgage loan which means if you want to sell your house, 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 Kern 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 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 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 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 adjustment. This insures that the payment adjustment will be very little even on a worst case rate change.
About Kernville California
The Kern River was named after artist and topographer Edward Kern, who accompanied John C. Fremont on his 1845 expedition. They camped at what was a fork of two rivers, now the middle of Lake Isabella. An 1858 gold rush led to the formation of a town briefly called Rogersville, then Williamsburg, which was in 1863 renamed Whiskey Flat after a bar opened. In 1864, the town was renamed Kernville.
After decades of planning, the Isabella Dam project began in 1948. As a result, Kernville was relocated upstream to its present location at the tip of the northeast fork of the man-made lake, along with certain historic buildings. Downtown visibly retains Kernville’s gold rush and Old West roots, attracting tourists along with the area’s natural scenery and outdoor activities. The town’s original location is slightly east of Wofford Heights. Foundations and other remnants can still be seen when the lake is low. The famous Mountain Inn, built mainly to house movie stars and crew before the 1948 move, is now (partially) at the new Kernville, renamed the River View Lodge.
Whiskey Flat Days is the annual celebration of the area’s Wild West roots. A parade, historical re-enactments, pioneer-style camps, a carnival, street vendors and rodeo are just part of the festivities put on every President’s Day weekend and attended by thousands of visitors.
Even with its annual summer influx of tourists, Kernville remains one of the most quaint, conservative relics of early California. Many local families trace their lineage to original 19th century homesteaders. The post office, established at the original site in 1868, was moved to the new site in 1951.
The original townsite is now registered as California Historical Landmark #132.
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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 Kern 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 Mortgage Loans
In addition to its popular FHA loan, the FHA also insures other loan programs offered by private lenders. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans help property buyers acquire a home– and renovate it– all with a single mortgage. House owners can likewise use the program to re-finance their existing home mortgage and add the expense of remodeling tasks into the new loan. FHA 203( k) loans been available in two types:
- The minimal 203( k) has an easier application process, and the repair work or enhancements need to amount to $35,000 or less.
- The basic 203( k) needs additional documentation and applies to improvements costing more than $5,000, however the total value of the home must still fall within the FHA home loan limit for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse mortgage and is likewise guaranteed by the FHA. A HECM permits older homeowners (aged 62 and up) with considerable equity or those who own their houses outright to withdraw a part of their house’s equity. The amount that will be readily available for withdrawal differs by debtor and depends upon the age of the youngest customer or qualified non-borrowing spouse, current rates of interest and the lower of the house’s appraised value or the HECM FHA home loan limit or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA permit homebuyers to acquire homes that are already energy effective, such as EnergyStar-certified buildings. Or they can be utilized to purchase and remodel 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 called the Graduated Payment Mortgage, this program is geared at debtors whose earnings will increase over time. You begin with smaller month-to-month payments that gradually increase. 5 specific strategies are readily available: 3 strategies that enable 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. Two other plans set payment increases over 10 years at 2 percent and 3 percent every year.
(Or call 213-474-7389 to ask a local lender anything!)
FHA Loan Limits for 2023
For 2019, the flooring limit for FHA loans in the majority of the country is $314,827, up from $294,515 in 2018. For high-cost areas, the ceiling is $726,525, up from $679,650 a year ago. These limitations are described as “ceilings” and “floors” that FHA will insure. FHA updates restrict amounts each year in action to altering house prices.
FHA is required by law to change its amounts 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 cost of living will have higher limitations, and vice versa. Unique exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building and construction is more costly.
FHA Loan Relief
Loan servicers can provide some versatility on FHA loan requirements to those who have actually suffered a major financial challenge or are having a hard time to make their payments.
That relief might be in the form of a momentary period of forbearance, a loan modification that would decrease the rates of interest, 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 Kernville CA?
The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve mortgages. However, mortgage lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Kernville CA, you might have better luck with looking around for another.
Note: you never know until you apply. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender in Kernville 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 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 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 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
Borrowers get their home loans from FHA-approved lending institutions in Kernville rather than the FHA itself, which only insures the loans. FHA-approved lending institutions can have different rates and expenses, even for the exact same loan.
FHA loans are available through lots of sources– from the biggest banks and cooperative credit union to community banks and independent mortgage lenders. Expenses, services and underwriting requirements vary among loan providers or home mortgage brokers, so it’s crucial to look around.
Discover more about how to find low FHA home mortgage lending institution.