How To Qualify For FHA Loan in Madera California (Madera County)

How To Qualify For FHA Loan in Madera California (Madera County)

Looking for an FHA Loan in Madera California?

An FHA loan is a home loan that’s insured by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA home loans require lower 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 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 grow the housing market by making mortgages much more accessible and attainable for people with less than stellar credit or a low down payment due to FHA mortgage limits in Madera, 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 mortgages at beneficial 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.


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Benefits of FHA Loans: Low Down Payments and Less Strict Credit Score Requirements

FHA Loan in Madera

Typically an FHA loan in Madera 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 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 circumstances.

Another advantage of an FHA loan 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 Madera 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 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 procedure.

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 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 Madera California

The town was named after the Spanish term for lumber. The town was laid out by the California Lumber Company in 1876. From 1876 to 1931, a 63-mile (101 km) water flume carried lumber from the mountains to Madera where the lumber was shipped by train.

The first post office at Madera opened in 1877. On May 16, 1893, Madera County officially became a county of the state of California and the town incorporated as the City of Madera on March 27, 1907. One of the city’s first African Americans to hold an elected office was Rev. Naaman N. Haynes, who was voted in as a Madera Unified School District school board trustee in the 1960s.

Landmarks include the historic Madera County Courthouse, the notable Madera water tower, and a fully operational drive-in movie theater.

Madera is located at 36°57′41″N 120°03′39″W / 36.96139°N 120.06083°W / 36.96139; -120.06083. The geographic center of California is 38 mi (61 km) east of Madera. Via California Route 99, the city is 23 miles (37 km) northwest of Fresno and 72 miles (116 km) southeast of Modesto. According to the United States Census Bureau, Madera has a total area of 16.5 square miles (43 km2), all of it recorded as land. The Fresno River, a tributary of the San Joaquin River, passes through the city north of downtown.

Madera is the location of the Madera AVA wine region.

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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 Madera 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 used by personal loan providers. Here’s a take a look at each of them.

  • FHA 203( k) loans – These FHA loans assist property buyers purchase a house– and remodel it– all with a single home mortgage. House owners can likewise use the program to refinance their existing mortgage 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 must amount to $35,000 or less.
    • The basic 203( k) needs additional paperwork and applies to enhancements costing more than $5,000, however the total worth of the residential or commercial property need to still fall within the FHA home loan limitation for the location.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home loan and is likewise insured by the FHA. A HECM permits older property owners (aged 62 and up) with significant equity or those who own their houses outright to withdraw a portion of their home’s equity. The quantity that will be readily available for withdrawal varies by customer and depends upon the age of the youngest borrower or eligible non-borrowing spouse, present interest rates and the lesser of the house’s evaluated worth or the HECM FHA mortgage limitation or list prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA permit homebuyers to purchase houses that are currently energy efficient, such as EnergyStar-certified buildings. 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 larger deposit.
  • FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is geared at borrowers whose earnings will increase in time. You begin with smaller monthly payments that gradually increase. Five specific strategies are offered: 3 plans that enable five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent each year. Two other plans set payment increases over 10 years at 2 percent and 3 percent annually.

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FHA Loan Limits for 2023

For 2019, the floor limit for FHA loans in the majority of the nation 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 described as “ceilings” and “floors” that FHA will guarantee. FHA updates restrict amounts each year in reaction to changing home rates.

FHA is needed by law to change its quantities based on the loan limits set by the Federal Housing Finance Agency, or FHFA, for standard mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations differ according to the expense of living in a certain location, and can be various from one county to the next. Areas with a higher cost of living will have greater limitations, and vice versa. Unique exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where home building and construction is more pricey.

FHA Loan Relief

Loan servicers can offer some flexibility on FHA loan requirements to those who have actually suffered a severe financial hardship or are struggling to make their payments.

That relief might be in the form of a temporary period of forbearance, a loan adjustment that would lower the rate of interest, extend the payback 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 Madera CA?

The FHA makes it relatively easy to qualify for a mortgage. Again, the government guarantees the loan, so mortgage lenders are more willing to approve loans. 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 Madera CA, you might have better luck with choosing 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 Madera to find out for sure.

Income limits: there are none. You’ll need enough to show that you can repay the home 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 demonstrates 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 mortgage from FHA-approved loan providers in Madera rather than the FHA itself, which just insures the loans. FHA-approved loan providers can have various rates and costs, even for the exact same loan.

FHA loans are readily available through numerous sources– from the greatest banks and cooperative credit union to community banks and independent home mortgage loan providers. Costs, services and underwriting standards vary among lenders or home mortgage brokers, so it’s essential to look around.

Find out more about how to discover low FHA home mortgage loan provider.


(Or call 213-474-7389 to ask a local lender anything!)