How To Qualify For FHA Loan in Leavitt California (Lassen County)
Looking for an FHA Loan in Leavitt California?
An FHA loan is a home loan that’s 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 significant to remember though, that the lower the credit score, 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 adequate insurance; and to help stimulate the housing market by making mortgages much more accessible and attainable for people with not so great credit or a low down payment due to FHA mortgage limits in Leavitt, 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, mortgage 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.
(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 Leavitt 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 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 circumstances.
Another advantage of an FHA mortgage 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 Lassen 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 home 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 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 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 very little even on a worst case rate change.
About Leavitt California
Leavitt is an unincorporated community in Lassen County, California, United States, located alongside the Southern Pacific Railroad, Fernley and Lassen Railway branch, 7 miles (11 km) east of Susanville, and 7 miles west of Litchfield, at an elevation of 4,104 feet (1,251 m). It is the site of the High Desert State Prison.
Benjamin Hanson Leavitt (1834–1918), a pioneer rancher and lumberman who came from the state of Maine, settled in Lassen County in 1864 and proposed to build this town on his ranch in 1912. It consisted of one store, a few dwellings and a corral. Benjamin Leavitt was a descendant of Samuel Leavitt of Exeter, New Hampshire.
Benjamin Leavitt engineered the Honey Lake Valley irrigation system, including Leavitt Lake. Leavitt also named nearby Clinton, California, for his hometown of Clinton in Kennebec County, Maine. (The town was renamed Leavitt Lake in 1973 when house construction began there.) Benjamin Leavitt was married to Celara Cleveland (Edwards) Leavitt, born in Massachusetts.
A post office at Leavitt was established in October 1914, and named after May F. Leavitt, the first postmaster. It was discontinued in December 1920.
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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 Lassen 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 Home Loans
In addition to its popular FHA loan, the FHA also guarantees other loan programs offered by personal lending institutions. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans assist property buyers purchase a home– and remodel it– all with a single home loan. Homeowners can also utilize the program to re-finance their existing home mortgage and add the cost of redesigning tasks into the new loan. FHA 203( k) loans come in two types:
- The restricted 203( k) has a simpler application process, and the repair work or enhancements need to 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 residential or commercial property need to still fall within the FHA home loan 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 considerable equity or those who own their houses outright to withdraw a portion of their house’s equity. The quantity that will be offered for withdrawal varies by customer and depends on the age of the youngest debtor or qualified non-borrowing spouse, existing interest rates and the lesser of the house’s assessed value or the HECM FHA home mortgage limit or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home loans backed by the FHA enable property buyers to buy homes that are already energy effective, such as EnergyStar-certified structures. Or they can be used to purchase and renovate older homes with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a bigger deposit.
- FHA Section 245( a) loan – Also called the Graduated Payment Mortgage, this program is tailored at customers whose incomes will increase with time. You start out with smaller sized monthly payments that gradually increase. Five specific plans are offered: 3 strategies that permit 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 annually.
(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 back. These limits are referred to as “ceilings” and “floors” that FHA will insure. FHA updates limit amounts each year in reaction to changing home costs.
FHA is needed by law to adjust its quantities based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for standard mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limits vary according to the expense of living in a certain area, and can be different from one county to the next. Areas with a greater expense of living will have greater limits, and vice versa. Special exceptions are produced real estate in Alaska, Hawaii, Guam and the Virgin Islands, where home building is more costly.
FHA Loan Relief
Loan servicers can provide some flexibility on FHA loan requirements to those who have actually suffered a severe financial hardship or are having a hard time to make their payments.
That relief might be in the form of a temporary period of forbearance, a loan adjustment that would reduce the rates of interest, extend the repayment duration, 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 Leavitt CA?
The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so lenders are more willing to approve mortgages. However, mortgage companies can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Leavitt 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 Leavitt 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 applicants. 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 shows good credit history and a solid track record of timely payments will likely be eligible for the mortgage.
How to Find FHA Lenders
Debtors get their home mortgage from FHA-approved loan providers in Leavitt instead of the FHA itself, which just guarantees the loans. FHA-approved lenders can have different rates and expenses, even for the same loan.
FHA loans are offered through many sources– from the biggest banks and credit unions to neighborhood banks and independent home loan loan providers. Expenses, services and underwriting standards differ among lending institutions or mortgage brokers, so it’s essential to search.
Learn more about how to find low FHA mortgage loan provider.