How To Qualify For FHA Loan in La Porte California (Plumas County)
Looking for an FHA Loan in La Porte California?
FHA loans have been a flexible mortgage program that’s been around since the 1930’s and is insured 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 FICO score 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 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 mortgage lenders with sufficient insurance; and to help stimulate the housing market by making home loans much more accessible and affordable for home-buyers with not so great credit or a low down payment due to FHA mortgage limits in La Porte, 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 mortgage payments.
Because of that insurance, mortgage lenders can, and do, offer FHA home loans at really attractive 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 La Porte 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.
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 is that it’s an assumable mortgage 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 Plumas 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 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 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 minimal even on a worst case rate change.
About La Porte California
At the time of statehood in 1850, La Porte was located in Yuba County, one of California’s 27 original counties.
In 1852, Sierra County was created from part of Yuba County. After that time, La Porte was located in Sierra County.
In 1854, Plumas County was created from part of Yuba County. In 1866, a further realignment placed La Porte in Plumas County, where it has remained ever since.
La Porte was named Rabbit Creek until 1857. It was a hub of commerce in the region during the California Gold Rush.
La Porte is located at 39°40′55″N 120°59′5″W / 39.68194°N 120.98472°W (39.681908, -120.984732).
According to the United States Census Bureau, the CDP has a total area of 4.5 square miles (12 km), all of it land.
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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 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 Plumas 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 guarantees other loan programs used by private lenders. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans help homebuyers acquire a house– and renovate it– all with a single home mortgage. Property owners can likewise use the program to re-finance their existing home loan and include the cost of renovating tasks into the brand-new loan. FHA 203( k) loans come in 2 types:
- The minimal 203( k) has an easier application process, and the repair work or improvements should total $35,000 or less.
- The basic 203( k) needs extra documentation and applies to enhancements costing more than $5,000, but the overall value of the property should still fall within the FHA home loan limit for the location.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse mortgage and is also insured by the FHA. A HECM allows older house owners (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 available for withdrawal differs by debtor and depends upon the age of the youngest customer or qualified non-borrowing partner, current rates of interest and the lesser of the home’s appraised value or the HECM FHA home loan limit or list prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA enable homebuyers to buy houses that are currently energy efficient, 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 tailored at borrowers whose incomes will increase with time. You begin with smaller sized monthly payments that slowly increase. Five particular strategies are offered: three strategies that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. Two other strategies 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 floor limit 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 earlier. These limits are described as “ceilings” and “floorings” that FHA will guarantee. FHA updates limit quantities each year in reaction to altering home costs.
FHA is required by law to change its amounts based on the loan limits set by the Federal Housing Finance Agency, or FHFA, for traditional mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations vary according to the cost of living in a specific area, and can be different from one county to the next. Locations with a higher cost of living will have greater limitations, and vice versa. Special exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where home construction is more costly.
FHA Loan Relief
Loan servicers can use some versatility on FHA loan requirements to those who have actually suffered a serious monetary difficulty 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 reduce the rate of interest, extend the payback 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 La Porte CA?
The FHA makes it relatively simple to qualify for a mortgage loan. Again, the government guarantees the loan, so mortgage 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 La Porte CA, you might have better luck with another.
Note: you never know until you submit an app. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender in La Porte 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 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 demonstrates 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 mortgage from FHA-approved loan providers in La Porte instead of the FHA itself, which just insures the loans. FHA-approved lending institutions can have different rates and costs, even for the exact same loan.
FHA loans are offered through lots of sources– from the biggest banks and cooperative credit union to neighborhood banks and independent home loan loan providers. Expenses, services and underwriting standards differ amongst loan providers or home loan brokers, so it’s crucial to search.
Learn more about how to discover low FHA home loan loan provider.