How To Qualify For FHA Loan in La Conchita California (Ventura County)
Looking for an FHA Loan in La Conchita 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 loans require more flexible minimum credit scores and down payments than many commonplace 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 FICO score can be between 500 – 579 if a 10% down payment is made. It’s crucial 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 requirements.
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 stimulate the housing market by making home loans more accessible and attainable for consumers with less than stellar credit or a low down payment due to FHA mortgage limits in La Conchita, 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 lenders can, and do, offer FHA mortgages at beneficial 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.
(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 La Conchita 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 mortgage loan.
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 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 Ventura 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 period. The 3/1 and 5/1 FHA Hybrid products permit 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 La Conchita California
“La Conchita”, Spanish for little conch shell, was first used as the name of a spur on the Southern Pacific railroad line in the 1880s and it was a name generally used to describe a broader area than the present day village. During this time until 1923, the small beach settlement was named “Punta” and the street names still carried today (San Fernando, Ojai, Bakersfield, Carpinteria, etc.) commemorated the home town areas of the railroad workers who settled in the town while building the Southern Pacific line. The name change and designated area then known as La Conchita are crucially important to any understanding of the region today and its geologic history. Up through the 1930s as historically documented, the area from Bates Road down to Mussel Shoals (then known as Mussel Rock) was referred to as La Conchita.
Prior to the establishment of the village of Punta, the coastal area was named Punta Gorda. “Punta Gorda”, Spanish for massive point, referred to the outstanding feature of this coastal area, a large rock promontory. A monk who stopped at the Mission San Buenaventura in 1817 first mentioned the site. The history of the hamlet of La Conchita is closely tied to developments in the Rincon Point area. The name “The Rincon” was also routinely used to designate the area from Carpinteria’s Rincon Point to Ventura’s Sea Cliff. From 1850 until 1873 when Ventura County was established, Punta Gorda was part of Santa Barbara County.
What is now the community of La Conchita was originally part of the 4,460-acre (18.0 km) Mexican land grant Rancho El Rincon given by Governor José Figueroa to Teodoro Arrellanes in 1835. Arrellanes’ daughter Maria married Dr. Matthew Biggs, and the property was transferred to Biggs in 1855. During the 1860s following a long period of drought, the record rainfall of 1868 produced major flooding throughout the county. It was during this time that major portions of the old ranchos were subdivided and sold off by heirs to an increasing number of arriving immigrants and settlers.
The Homestead Act of 1862 had brought many newcomers to settle in California. Levi Gould Stanchfield, born in Leeds, Maine in 1841, established a ranch at Punta Gorda in 1875 where he raised sheep, grew lima beans and built a ranch house at Mussel Rock. Stanchfield was married to Luisa Arenas. Her father, Luis Arenas, held several land grants, and in 1838 was Mayor of Los Angeles. Her mother Josepfa Palomares was the sister of Ygnacio Palomares one of the first settlers of the San Gabriel Valley. Stanchfield sold the property to Charles. E. Ablett in 1879. Ablett, born in England, was well known as a druggist in Santa Barbara and a key figure in the homesteading activity of the Punta Gorda area from the 1880s on. At this time, the La Conchita section of the Southern Pacific railroad coast route was almost completed and the village of Punta was established. Among the founding families of Punta were the Callis from Kentucky; the Mullins from Charlottetown, Prince Edward Island, Canada; and the Gaynors from Ireland. Members of these families were prominent in local history for the next sixty years.
From 1880-1916 a U.S. post office was sited in Punta, and Punta Gorda served as a stop for both the stagecoach and the railroad. Charles E. Ablett served as the first postmaster. In 1883 the Rincon School district was established and classes were first held in the home of Robert Callis with nine pupils in attendance. The 1883 census listed 17 children living in Punta. In 1890 the name was changed to the Punta Gorda School District, and the first school structure was built in the village. The Ventura County Register of 1890, as well as the Rincon district electoral records from 1900–1916, reflects a varied mix of ethnicities among the residents in Punta and the Rincon area.
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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 house. 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 Ventura 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 look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers acquire a house– and remodel it– all with a single mortgage. Homeowners can also use the program to re-finance their existing home loan and add the cost of renovating jobs into the brand-new loan. FHA 203( k) loans been available in 2 types:
- The minimal 203( k) has a much easier application process, and the repair work or enhancements should total $35,000 or less.
- The standard 203( k) requires extra paperwork and applies to improvements costing more than $5,000, but the total worth of the home must still fall within the FHA mortgage limitation for the area.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home loan and is also guaranteed by the FHA. A HECM allows older property owners (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 available for withdrawal varies by borrower and depends on the age of the youngest borrower or qualified non-borrowing spouse, current rates of interest and the lesser of the home’s appraised value or the HECM FHA home loan limitation or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA enable property buyers to buy houses that are currently energy efficient, such as EnergyStar-certified structures. Or they can be used to purchase and remodel older homes with energy-efficient, or “green,” updates and roll the expenses 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 borrowers whose incomes will increase in time. You start with smaller sized monthly payments that slowly go up. Five specific plans are readily available: 3 strategies that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. Two 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 flooring limitation for FHA loans in most 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 ago. These limits are described as “ceilings” and “floors” that FHA will insure. FHA updates limit quantities each year in action to changing house prices.
FHA is required by law to adjust its amounts based on the loan limits set by the Federal Housing Finance Agency, or FHFA, for traditional home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations vary according to the cost of living in a particular location, and can be various from one county to the next. Locations with a greater cost of living will have greater limits, and vice versa. Special exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where home construction is more pricey.
FHA Loan Relief
Loan servicers can provide some versatility on FHA loan requirements to those who have suffered a severe financial challenge or are struggling to make their payments.
That relief might be in the form of a momentary period of forbearance, a loan adjustment that would lower the rates of interest, extend the repayment 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 La Conchita CA?
The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so lenders are more willing to approve mortgages. However, lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near La Conchita CA, you might have better luck with 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 La Conchita 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 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 mortgage.
How to Find FHA Lenders
Borrowers get their home loans from FHA-approved loan providers in La Conchita instead of the FHA itself, which only insures the loans. FHA-approved lending institutions can have various rates and costs, even for the exact same loan.
FHA loans are available through numerous sources– from the most significant banks and credit unions to neighborhood banks and independent home loan loan providers. Costs, services and underwriting requirements differ among lending institutions or home loan brokers, so it’s crucial to shop around.
Discover more about how to discover low FHA mortgage loan provider.
