How To Qualify For FHA Loan in Nipton California (San Bernardino County)

How To Qualify For FHA Loan in Nipton California (San Bernardino County)

Looking for an FHA Loan in Nipton California?

FHA loans have been a flexible home loan 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 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 increase of foreclosures and defaults that happened in 1930s; to provide lending companies with sufficient insurance; and to help spark 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 Nipton, 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 home loans at beneficial 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 Nipton

Typically an FHA loan in Nipton 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 approved for private mortgage insurance should look into whether an FHA loan is the popular option for their personal scenario.

Another advantage of an FHA mortgage loan is that it’s an assumable mortgage loan which means if you want to sell your property, 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 San Bernardino 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 time frame. 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 Nipton California

A mining camp was established here at the crossroads of two wagon trails. The town was founded on February 9, 1905, with the coming of the first train on the newly constructed San Pedro, Los Angeles & Salt Lake Railroad. It was called “Nippeno Camp” following a nearby discovery of gold. The name was changed to Nipton when the San Pedro, Los Angeles & Salt Lake Railroad merged with the Union Pacific Railroad around 1910. In addition to being a cattle-loading station for several local ranches, the town and depot also supplied numerous mines in the area, becoming a social center for the sparse population of the region.

In September 2017, Nipton was purchased by American Green Inc., for US$5 million with plans to turn the town into a cannabis tourism destination. The CEO of the company hoped to make this into the first “Pot Town, USA”. American Green Inc. sold the town in March 2018 after failing to attract the capital investment necessary to continue the project. The town was sold to Delta International Oil & Gas for a total of $7.7 million in debt assumption and Delta preferred stock, along with a provision that it continue with the project to transform the 80-acre (32 ha) town on the edge of the Mojave Desert into a cannabis-themed resort. As of November 16, 2020, the town was listed for sale again for $2.75 million.

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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 San Bernardino 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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Types of FHA Home Loans

In addition to its popular FHA loan, the FHA likewise insures other loan programs provided by private lending institutions. Here’s a look at each of them.

  • FHA 203( k) loans – These FHA loans help homebuyers acquire a home– and refurbish it– all with a single mortgage. House owners can likewise utilize the program to refinance their existing home loan and include the cost of remodeling jobs into the new loan. FHA 203( k) loans come in 2 types:
    • The limited 203( k) has a much easier application process, and the repair work or improvements must amount to $35,000 or less.
    • The standard 203( k) needs extra documentation and applies to improvements costing more than $5,000, but the overall worth of the property must still fall within the FHA mortgage limitation for the area.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home loan 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 portion of their home’s equity. The amount that will be readily available for withdrawal varies by debtor and depends upon the age of the youngest debtor or qualified non-borrowing partner, present interest rates and the lesser of the home’s appraised value or the HECM FHA mortgage limit or list prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA enable property buyers to purchase homes that are already energy effective, such as EnergyStar-certified buildings. 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 down payment.
  • FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is geared at borrowers whose incomes will increase over time. You start with smaller sized month-to-month payments that slowly increase. Five particular strategies are offered: three strategies that permit 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. Two other plans set payment boosts over 10 years at 2 percent and 3 percent every year.

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FHA Loan Limits for 2022

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 limits are referred to as “ceilings” and “floorings” that FHA will guarantee. FHA updates limit amounts each year in response to changing home rates.

FHA is required by law to adjust its quantities based upon 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 floor limitations vary according to the expense of living in a specific location, and can be different from one county to the next. Areas with a higher expense of living will have higher limitations, and vice versa. Unique exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where home building is more costly.

FHA Loan Relief

Loan servicers can use some versatility on FHA loan requirements to those who have suffered a major financial challenge or are struggling to make their payments.

That relief might be in the form of a short-term period of forbearance, a loan modification that would lower the rates of interest, extend the repayment period, 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 Nipton CA?

The FHA makes it relatively simple 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 are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Nipton CA, you might have better luck with shopping around for a better option.

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 Nipton 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 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 demonstrates 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 loan providers in Nipton rather than the FHA itself, which only guarantees the loans. FHA-approved loan providers can have different rates and costs, even for the very same loan.

FHA loans are offered through numerous sources– from the most significant banks and credit unions to community banks and independent home loan lending institutions. Costs, services and underwriting requirements vary among lending institutions or home loan brokers, so it’s essential to look around.

Discover more about how to discover low FHA mortgage lender.


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