How To Qualify For FHA Loan in Lake San Marcos California (San Diego County)
Looking for an FHA Loan in Lake San Marcos California?
An FHA loan is a home loan that’s insured by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA loans 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 FICO 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 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 rise of foreclosures and defaults that happened in 1930s; to provide lenders with adequate insurance; and to help spark the housing market by making home loans highly accessible and affordable for people with less than stellar credit or a low down payment due to FHA mortgage limits in Lake San Marcos, 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 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.
(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 Lake San Marcos 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 home 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 scenario.
Another advantage of an FHA mortgage is that it’s an assumable mortgage 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 San Diego 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 mortgage loan programs will enable 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 readjusts annually after the initial fixed time frame. The 3/1 and 5/1 FHA Hybrid products allow 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 minimal even on a worst case rate change.
About Lake San Marcos California
There is considerable evidence of human inhabitation of the area currently known as Lake San Marcos long before the Spanish establishment of the Mission San Diego de Alcala in A.D. 1769. Native American tribes lived and flourished near the San Luis Rey River in the Late Prehistoric period. Much of this area was originally part of Rancho Los Vallecito de San Marcos. On April 22, 1840, Governor Juan Bautista Alvarado granted the 8,877-acre Rancho Los Vallecitos de San Marcos to Don Jose Maria Alvarado who married Lugarda Osuna, daughter of the owner of San Dieguito Rancho, Don Juan Maria Osuna.
Lake San Marcos is an unincorporated area of San Diego County, surrounded by the City of San Marcos. It is a resort-based community surrounding the Lake San Marcos reservoir. It is located at(33.122562, -117.209411).
According to the United States Census Bureau, the CDP has a total area of 1.8 square miles (4.7 km). 1.7 square miles (4.4 km2) of it is land and 0.1 square miles (0.26 km) of it (4.76%) is water. The lake after which the area is named is a large artificial body of water originally created for purposes of irrigation and watering cattle; today, however, it is used primarily for recreational and commercial purposes. The lake was created by a concrete dam built between 1946 and 1951.
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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 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 San Diego 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 Home Loans
In addition to its popular FHA loan, the FHA likewise guarantees other loan programs used by personal lenders. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers buy a home– and remodel it– all with a single home mortgage. House owners can also utilize 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 been available in 2 types:
- The limited 203( k) has a simpler application process, and the repairs or improvements must total $35,000 or less.
- The basic 203( k) needs additional documents and applies to improvements costing more than $5,000, but the overall value of the property must still fall within the FHA mortgage limit for the location.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home loan and is also insured by the FHA. A HECM enables 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 amount that will be readily available for withdrawal varies by customer and depends on the age of the youngest debtor or qualified non-borrowing spouse, present rate of interest and the lower of the home’s appraised value or the HECM FHA home loan limitation or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA permit property buyers to buy homes that are already energy effective, such as EnergyStar-certified buildings. Or they can be utilized to buy and remodel older houses 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 known as the Graduated Payment Mortgage, this program is geared at borrowers whose incomes will increase in time. You start with smaller sized monthly payments that gradually increase. Five specific plans are readily available: 3 plans that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. 2 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 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 ago. These limits are referred to as “ceilings” and “floorings” that FHA will guarantee. FHA updates restrict amounts each year in response to changing house prices.
FHA is needed by law to adjust its quantities based upon the loan limits set by the Federal Housing Finance Agency, or FHFA, for standard home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations vary according to the expense of living in a certain location, and can be different from one county to the next. Locations with a higher expense of living will have higher limits, and vice versa. Unique exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where home building is more pricey.
FHA Loan Relief
Loan servicers can use some versatility on FHA loan requirements to those who have suffered a severe financial hardship or are having a hard time to make their payments.
That relief might be in the form of a short-term period of forbearance, a loan modification that would lower 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 Lake San Marcos 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, lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Lake San Marcos CA, you might have better luck with shopping around for a better option.
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 Lake San Marcos 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 requirements 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
Customers get their mortgage from FHA-approved lenders in Lake San Marcos instead of the FHA itself, which only guarantees the loans. FHA-approved lending institutions can have various 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 mortgage lending institutions. Costs, services and underwriting requirements differ amongst loan providers or home loan brokers, so it’s essential to shop around.
Learn more about how to find low FHA home loan lending institution.