How To Qualify For FHA Loan in Midas California (Placer County)
Looking for an FHA Loan in Midas 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 credit 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 pay. 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 mortgage companies with sufficient insurance; and to help grow the housing market by making home loans highly accessible and affordable for home-buyers with less than stellar credit or a low down payment due to FHA mortgage limits in Midas, 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, 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 Midas 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 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 loan is that it’s an assumable home 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 Placer 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 make it possible for 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 changes annually after the initial fixed time frame. 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 adjustment. This insures that the payment adjustment will be very little even on a worst case rate change.
About Midas California
Midas (formerly, Shady Run) is an unincorporated community in Placer County, California. Midas is located on the Southern Pacific Railroad, 4.5 miles (7.2 km) east of Dutch Flat. It lies at an elevation of 4153 feet (1266 m).
The Shady Run post office operated from 1872 to 1879 and from 1903 to 1904.
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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 Placer 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 provided by private loan providers. Here’s 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 loan. House owners can likewise utilize the program to re-finance their current home loan and include the expense of redesigning tasks into the new loan. FHA 203( k) loans can be found in two types:
- The restricted 203( k) has a much easier application process, and the repairs or enhancements need to total $35,000 or less.
- The standard 203( k) needs extra documents and applies to enhancements costing more than $5,000, but the total worth of the property must still fall within the FHA home 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 permits older homeowners (aged 62 and up) with substantial equity or those who own their houses outright to withdraw a part of their home’s equity. The quantity that will be available for withdrawal differs by borrower and depends on the age of the youngest borrower or eligible non-borrowing spouse, current interest rates and the lesser of the house’s appraised worth or the HECM FHA home mortgage limit or list prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home loans backed by the FHA permit homebuyers to purchase houses that are currently energy effective, such as EnergyStar-certified structures. Or they can be used to buy and remodel older homes 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 referred to as the Graduated Payment Mortgage, this program is tailored at borrowers whose incomes will increase with time. You start out with smaller monthly payments that slowly increase. 5 specific strategies are available: three plans that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. Two other plans set payment boosts 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 most 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 referred to as “ceilings” and “floorings” that FHA will insure. FHA updates limit quantities each year in action to altering home costs.
FHA is required by law to change its quantities based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limits differ according to the expense of living in a particular location, and can be different from one county to the next. Areas with a greater expense 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 is more pricey.
FHA Loan Relief
Loan servicers can use some versatility on FHA loan requirements to those who have suffered a major financial challenge or are having a hard time to make their payments.
That relief might be in the form of a short-lived period of forbearance, a loan adjustment that would reduce the interest rate, extend the repayment period, or defer 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 Midas CA?
The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so lenders are more willing to approve mortgages. 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 Midas CA, you might have better luck with choosing another.
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 Midas to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the mortgage 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 guidelines 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 home loans from FHA-approved loan providers in Midas rather than the FHA itself, which only guarantees the loans. FHA-approved lending institutions can have various rates and costs, even for the very same loan.
FHA loans are available through lots of sources– from the most significant banks and credit unions to neighborhood banks and independent home loan lenders. Costs, services and underwriting requirements vary among lenders or mortgage brokers, so it’s essential to shop around.
Find out more about how to discover low FHA home loan lending institution.