How To Qualify For FHA Loan in Milpitas California (Santa Clara County)

How To Qualify For FHA Loan in Milpitas California (Santa Clara County)

Looking for an FHA Loan in Milpitas California?

FHA loans have been a flexible home loan program that’s been around since the 1930’s and is protected 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 requirements.

The FHA program was created in response to the increase of foreclosures and defaults that happened in 1930s; to provide mortgage companies with adequate insurance; and to help spark the housing market by making home loans more accessible and attainable for consumers with not so great credit or a low down payment due to FHA mortgage limits in Milpitas, 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 loan interest 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.

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

Typically an FHA loan in Milpitas 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.

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 best 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.

>> CHECK FHA ELIGIBILITY NOW <<

(Or call 562-502-1502 to ask a local lender anything!)

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 Santa Clara 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 mortgage loan programs will permit 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 time frame. The 3/1 and 5/1 FHA Hybrid products make it possible for 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 Milpitas California

Milpitas was first inhabited by the Tamyen (also spelled Thomien, Tamien, Thamien, or Tamiayn), a linguistic subgroup of the Muwekma Ohlone people who had resided in the San Francisco Bay Area for thousands of years. The Ohlone Indians lived a established life based upon everyday hunting and gathering. Some of the Ohlone lived in various villages within what is now Milpitas, including sites underneath what are now the Calvary Assembly of God Church and Higuera Adobe Park. Archaeological evidence gathered from Ohlone graves at the Elmwood Correctional Facility in 1993 revealed a wealthy trade with new tribes from Sacramento to Monterey.

During the Spanish expeditions of the late 18th century, several missions were founded in the San Francisco Bay Area. During the mission period, Milpitas served as a crossroads in the company of Mission San José de Guadalupe in modern-day Fremont and Mission Santa Clara de Asis, in gift Santa Clara. The house in modern-day Milpitas was at odds between the 6,353-acre (25.71 km2) Rancho Rincon de Los Esteros (Spanish for “corner of the wetlands”) granted to Ygnacio Alviso; the 4,457.8-acre (18.040 km2) Rancho Milpitas (Spanish for “little corn fields”) granted to José María Alviso; and the 4,394.35-acre (17.7833 km2) Rancho Los Tularcitos (Spanish for “little tule marshes”) granted to José Higuera. Jose Maria Alviso was the son of Francisco Xavier Alviso and Maria Bojorquez, both of whom arrived in San Francisco as children with the de Anza Expedition. (A son of Ygnacio Alviso was as a consequence named Jose Maria Alviso, this has led to some confusion by researchers.) Due to Jose Maria Alviso’s descendants’ difficulty securing his claims to the Rancho Milpitas property, portions of his estate were either swindled from the Alviso relatives or were sold to American settlers to pay for authentic fees.

Both landowners had built prominent adobe homes on their properties. Today, both adobes still exist and are the oldest structures in Milpitas. The seriously eroded walls of the Jose Higuera Adobe, now in Higuera Adobe Park, are encapsulated in a brick shell built c.1970 by Marian Weller, a descendant of pioneer Joseph Weller.

The Alviso Adobe can be seen mostly in its native form behind one kitchen complement made by the Cuciz associates after they purchased the adobe from the Gleason relations in 1922. Prior to the city acquiring the Alviso Adobe in 1995, it was the oldest at all times occupied adobe house in California dating from the Mexican era and today is still gradually creature restored and undergoing seismic upgrades by the City of Milpitas. Alviso Adobe History Park is to be opened, after the exterior restoration of the adobe and outbuildings is completed, as an university museum with historic items, trees, buildings, and documents.

In the 1850s, large numbers of Americans of English, German, and Irish lineage arrived to farm the fertile lands of Milpitas. The Burnett, Rose, Dempsey, Jacklin, Trimble, Ayer, Parks, Wool, Weller, Minnis, and Evans are accompanied by the prematurely settlers of Milpitas. (Today many schools, streets, and parks have been named in praise of these families.) These ahead of time settlers farmed the house that was taking into consideration the ranchos. Some set taking place businesses on what was next called Mission Road (now called Main Street) between Calaveras Road (now called Carlo Street) and the Alviso-Milpitas Road (now called Serra Way). By the late 20th century this Place became known as the “Midtown” district. Yet option influx of immigration came in the 1870s and 1880s as Portuguese sharecroppers from the Azores came to farm the Milpitas hillsides. Many of the Azoreans had such locally renowned surnames afterward Coelho, Covo, Mattos, Nunes, Spangler, Serpa, and Silva.

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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 house. 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 Santa Clara 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.

>> CHECK FHA ELIGIBILITY NOW <<

(Or call 562-502-1502 to ask a local lender anything!)

Kinds Of FHA Mortgage Loans

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

  • FHA 203( k) loans – These FHA loans assist property buyers acquire a home– and refurbish it– all with a single home mortgage. Property owners can also use the program to refinance their current mortgage and include the cost of renovating jobs into the brand-new loan. FHA 203( k) loans can be found in two types:
    • The minimal 203( k) has a much easier application process, and the repairs or improvements must total $35,000 or less.
    • The standard 203( k) requires extra documentation and applies to enhancements costing more than $5,000, but the total worth of the home should still fall within the FHA home mortgage limitation for the location.
  • House Equity Conversion Mortgage, or HECM – A HECM is the most popular type of reverse home mortgage and is likewise guaranteed by the FHA. A HECM permits older house owners (aged 62 and up) with significant equity or those who own their homes outright to withdraw a part of their home’s equity. The quantity that will be offered for withdrawal differs by customer and depends on the age of the youngest customer or eligible non-borrowing spouse, present interest rates and the lower of the home’s evaluated value or the HECM FHA mortgage limit or prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA permit homebuyers to acquire homes that are already energy effective, such as EnergyStar-certified buildings. Or they can be used to buy and renovate older homes 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 referred to as the Graduated Payment Mortgage, this program is tailored at customers whose incomes will increase with time. You begin with smaller sized month-to-month payments that slowly go up. 5 particular plans are available: 3 plans that enable five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. 2 other strategies set payment boosts over 10 years at 2 percent and 3 percent annually.

FHA Loan Limits for 2022

For 2019, the flooring limitation 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 described as “ceilings” and “floors” that FHA will guarantee. FHA updates restrict amounts each year in action to altering house costs.

FHA is needed by law to adjust its amounts based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for standard home mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limits vary according to the cost of living in a specific area, and can be various from one county to the next. Areas with a higher cost of living will have higher limitations, and vice versa. Unique exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building and construction is more costly.

FHA Loan Relief

Loan servicers can use some versatility on FHA loan requirements to those who have suffered a serious 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 lower the interest rate, extend the payback duration, 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 Milpitas CA?

The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so lending companies are more willing to approve loans. 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 Milpitas 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 Milpitas 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 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 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 mortgage.

How to Find FHA Lenders

Customers get their home loans from FHA-approved loan providers in Milpitas instead of the FHA itself, which only insures the loans. FHA-approved loan providers can have different rates and expenses, even for the exact same loan.

FHA loans are offered through lots of sources– from the biggest banks and credit unions to community banks and independent home loan loan providers. Costs, services and underwriting standards differ among loan providers or mortgage brokers, so it’s important to look around.

Find out more about how to discover the very best FHA home mortgage loan provider.

>> CHECK FHA ELIGIBILITY NOW <<

(Or call 562-502-1502 to ask a local lender anything!)

Have Questions?

Let a local lender get you answers.
Call 562-502-1502 now!