How To Qualify For FHA Loan in Mount Shasta California (Siskiyou County)
Looking for an FHA Loan in Mount Shasta California?
An FHA loan is a mortgage 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 crucial 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 lenders with adequate insurance; and to help grow the housing market by making mortgages highly accessible and affordable for home-buyers with less than stellar credit or a low down payment due to FHA mortgage limits in Mount Shasta, 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 companies can, and do, offer FHA home loans at beneficial 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.
(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 Mount Shasta 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 popular option for their personal scenario.
Another advantage of an FHA home loan is that it’s an assumable 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 Siskiyou 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 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 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 minimal even on a worst case rate change.
About Mount Shasta California
The site of the present-day city of Mount Shasta was within the range of the Okwanuchu tribe of Native Americans. During the 1820s, early Euro-American trappers and hunters first passed through the area, following the path of the Siskiyou Trail. The Siskiyou Trail was based on a network of ancient Native American footpaths connecting California and the Pacific Northwest. The discovery of gold at nearby Yreka, California in 1851 dramatically increased traffic along the Siskiyou Trail and through the site of present-day Mount Shasta. Pioneer Ross McCloud built one of the first lumber mills in the area, near the site of the present Sisson Museum. The completion of a stagecoach road between Yreka and Upper Soda Springs in the late 1850s led to the building of Sisson’s Hotel, as a stop for weary travelers, and as a staging ground for adventuresome tourists intending to climb Mount Shasta.
The area where the town grew was known first as Strawberry Valley, and then as Berryvale. The post office opened in 1870 as Berryvale. After 1886 it was known as Sisson after a local businessman, Justin Hinckley Sisson who ran a stagecoach inn and tavern as well as donated the land for the town site and the Central Pacific Railroad station in 1886. Street names honor members of Sisson’s family.
The 1887 completion of the Central Pacific Railroad, built along the line of the Siskiyou Trail, brought a dramatic increase in tourism, lumbering, and population into Mount Shasta. This early development continued to focus on tourism and lumbering. The early 1900s saw the influx of a large number of Italian immigrants to Mount Shasta and neighboring towns, most of whom were employed in the timber industry.
The city incorporated on May 31, 1905. The name of the city was finalized “City of Mount Shasta” on November 10, 1925, after a popular vote in 1922.
Mount Shasta is located at 41°18’52” North, 122°18’41” West (41.314542, -122.311510), along Interstate 5 south of Weed and north of Dunsmuir, California.
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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 Siskiyou 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 Mortgage Loans
In addition to its popular FHA loan, the FHA also insures other loan programs offered by personal lenders. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans assist property buyers purchase a home– and refurbish it– all with a single home mortgage. Homeowners can also utilize the program to refinance their current home mortgage and add the cost of redesigning jobs into the brand-new loan. FHA 203( k) loans can be found in two types:
- The limited 203( k) has a much easier application procedure, and the repairs or enhancements must amount to $35,000 or less.
- The basic 203( k) needs extra documents and applies to improvements costing more than $5,000, but the total worth of the property must still fall within the FHA home loan limitation for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse mortgage and is also guaranteed by the FHA. A HECM permits older homeowners (aged 62 and up) with significant equity or those who own their homes outright to withdraw a portion of their home’s equity. The amount that will be available for withdrawal varies by debtor and depends on the age of the youngest customer or eligible non-borrowing spouse, current rates of interest and the lesser of the home’s evaluated worth or the HECM FHA mortgage limit or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient home mortgages backed by the FHA enable property buyers to purchase homes that are already energy efficient, 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 known as the Graduated Payment Mortgage, this program is tailored at debtors whose earnings will increase gradually. You begin with smaller sized regular monthly payments that gradually go up. 5 specific strategies are offered: three plans that enable five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. 2 other strategies set payment boosts over 10 years at 2 percent and 3 percent each year.
(Or call 213-474-7389 to ask a local lender anything!)
FHA Loan Limits for 2023
For 2019, the flooring 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 back. These limitations are described as “ceilings” and “floors” that FHA will insure. FHA updates restrict quantities each year in reaction to changing home prices.
FHA is required by law to change its amounts based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for standard home loans ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations vary according to the cost of living in a particular area, and can be different from one county to the next. Areas with a greater cost of living will have higher limits, and vice versa. Unique exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where house building and construction is more expensive.
FHA Loan Relief
Loan servicers can provide some versatility on FHA loan requirements to those who have actually suffered a serious monetary hardship or are having a hard time to make their payments.
That relief might be in the form of a temporary duration of forbearance, a loan modification that would lower the rate of interest, extend the payback duration, 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 Mount Shasta CA?
The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve mortgages. However, mortgage companies can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Mount Shasta CA, you might have better luck with shopping around for a better option.
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 Mount Shasta 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 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 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 attests good credit history and a solid track record of timely payments will likely be eligible for the mortgage.
How to Find FHA Lenders
Borrowers get their mortgage from FHA-approved lenders in Mount Shasta rather than the FHA itself, which just guarantees the loans. FHA-approved lenders can have various rates and expenses, even for the same loan.
FHA loans are readily available through numerous sources– from the biggest banks and cooperative credit union to community banks and independent home loan lending institutions. Costs, services and underwriting standards differ amongst loan providers or home mortgage brokers, so it’s important to shop around.
Discover more about how to discover low FHA home loan loan provider.