How To Qualify For FHA Loan in Mexican Colony California (Kern County)

How To Qualify For FHA Loan in Mexican Colony California (Kern County)

Looking for an FHA Loan in Mexican Colony 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 credit score can be between 500 – 579 if a 10% down payment is made. It’s crucial to remember though, that the lower the credit rating, 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 companies with sufficient insurance; and to help spark the housing market by making home loans much more accessible and attainable for people with less than stellar credit or a low down payment due to FHA mortgage limits in Mexican Colony, 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, 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.


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

FHA Loan in Mexican Colony

Typically an FHA loan in Mexican Colony 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 circumstances.

Another advantage of an FHA mortgage 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 Kern 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 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 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 adjusts annually after the initial fixed period. The 3/1 and 5/1 FHA Hybrid products enable 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 very little even on a worst case rate change.

About Mexican Colony California

Mexican Colony (Spanish: La Colonia Mexicana de Shafter or simply Colonia Mexicana) is a census-designated place in Kern County, California. It is located 2 miles (3.2 km) south of Shafter, at an elevation of 331 feet (101 m). The population was 283 at the 2020 census.

At the 2010 census Mexican Colony had a population of 281. The population density was 8,841.8 people per square mile (3,413.8/km). The racial makeup of Mexican Colony was 162 (57.7%) White, 0 (0.0%) African American, 15 (5.3%) Native American, 0 (0.0%) Asian, 0 (0.0%) Pacific Islander, 93 (33.1%) from other races, and 11 (3.9%) from two or more races. Hispanic or Latino of any race were 227 people (80.8%).

The whole population lived in households, no one lived in non-institutionalized group quarters and no one was institutionalized.

There were 71 households, 45 (63.4%) had children under the age of 18 living in them, 32 (45.1%) were opposite-sex married couples living together, 21 (29.6%) had a female householder with no husband present, 7 (9.9%) had a male householder with no wife present. There were 9 (12.7%) unmarried opposite-sex partnerships, and 0 (0%) same-sex married couples or partnerships. 10 households (14.1%) were one person and 7 (9.9%) had someone living alone who was 65 or older. The average household size was 3.96. There were 60 families (84.5% of households); the average family size was 4.25.

The age distribution was 115 people (40.9%) under the age of 18, 30 people (10.7%) aged 18 to 24, 70 people (24.9%) aged 25 to 44, 46 people (16.4%) aged 45 to 64, and 20 people (7.1%) who were 65 or older. The median age was 24.3 years. For every 100 females, there were 105.1 males. For every 100 females age 18 and over, there were 102.4 males.

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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 Kern 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.


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Kinds Of FHA Mortgage Loans

In addition to its popular FHA loan, the FHA also guarantees other loan programs provided by personal loan providers. Here’s a take a look at each of them.

  • FHA 203( k) loans – These FHA loans assist homebuyers purchase a house– and refurbish it– all with a single home loan. Homeowners can also utilize the program to refinance their current home loan and add the cost of remodeling tasks into the new loan. FHA 203( k) loans can be found in 2 types:
    • The minimal 203( k) has an easier application process, and the repair work or enhancements need to amount to $35,000 or less.
    • The basic 203( k) requires additional documents and applies to improvements costing more than $5,000, but the overall worth of the residential or commercial property should still fall within the FHA home loan limit for the area.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home mortgage and is also 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 part of their house’s equity. The amount that will be available for withdrawal varies by debtor and depends upon the age of the youngest customer or eligible non-borrowing partner, current interest rates and the lesser of the home’s assessed value or the HECM FHA home mortgage limit or prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA enable homebuyers to buy houses that are currently energy effective, such as EnergyStar-certified buildings. Or they can be used to purchase and renovate older houses with energy-efficient, or “green,” updates and roll the expenses of the upgrades into the loan without a bigger down payment.
  • FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is tailored at debtors whose earnings will increase with time. You start out with smaller sized monthly payments that slowly increase. Five particular strategies are offered: three plans that allow 5 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 each year.

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FHA Loan Limits for 2022

For 2019, the floor limit for FHA loans in most of the country is $314,827, up from $294,515 in 2018. For high-cost areas, the ceiling is $726,525, up from $679,650 a year back. These limits are referred to as “ceilings” and “floorings” that FHA will insure. FHA updates restrict amounts each year in reaction to altering home prices.

FHA is needed by law to adjust its amounts based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for conventional mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and floor 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 greater expense of living will have higher limitations, and vice versa. Special exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where home building and construction is more pricey.

FHA Loan Relief

Loan servicers can use some versatility on FHA loan requirements to those who have suffered a serious financial difficulty 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 rate of interest, extend the payback 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 Mexican Colony CA?

The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so lending companies are more willing to approve home loans. However, mortgage companies can (and do) set standards that may be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Mexican Colony CA, you might have better luck with looking around for another.

Note: you never know until you apply. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender in Mexican Colony 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 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 proves 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 loan providers in Mexican Colony rather than the FHA itself, which just guarantees the loans. FHA-approved loan providers can have various rates and expenses, even for the 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 lenders. Costs, services and underwriting standards differ amongst lending institutions or mortgage brokers, so it’s crucial to shop around.

Find out more about how to discover low FHA mortgage lender.


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