How To Qualify For FHA Loan in Notleys Landing California (Monterey County)
Looking for an FHA Loan in Notleys Landing 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 FICO score can be between 500 – 579 if a 10% down payment is made. It’s important to remember though, that the lower the credit score, 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 lenders with sufficient insurance; and to help spark the housing market by making mortgages much more accessible and attainable for people with not so great credit or a low down payment due to FHA mortgage limits in Notleys Landing, California. Essentially, the federal government insures loans for FHA-approved mortgage lenders in order to reduce their risk of loss if a borrower defaults on their home loan payments.
Because of that insurance, lenders can, and do, offer FHA home loans 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.
(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 Notleys Landing 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 loan is that it’s an assumable loan which means if you want to sell your home, 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 Monterey 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 vigorous with respect to gifts for down-payment. Very few 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 readjusts 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 modification. This insures that the payment adjustment will be very little even on a worst case rate change.
About Notleys Landing California
Notleys Landing (also, Notley’s Landing) is an uninhabited former hamlet in the Big Sur region of Monterey County, California. It was located near the mouth of the Palo Colorado Canyon 11 miles (18 km) south of the Carmel River, at an elevation of 112 feet (34 m).
Early homesteaders in the area included George Notley (March 21, 1896), his brother William F. Notley (May 8, 1901), Isaac N. Swetnam, who obtained a land patent for property along the Little Sur River and surrounding area on February 1, 1894. and Samuel L. Trotter (January 23, 1914).
Swetnam and Trotter worked for the Notley brothers, who harvested Redwood in the Santa Cruz area and expanded operations to include tanbark in the mountains around Palo Colorado Canyon. Swetnam married Ellen J. Lawson and bought the Notley home at the mouth of Palo Colorado Canyon for their residence. He also constructed two cabins and a small barn on his patent along the Little Sur River at the site of the future Pico Blanco Boy Scout camp.
The cabin at the mouth of Palo Colorado Canyon still stands. The side of the home facing Highway 1 used to be the rear of the building when the original wagon road ran on the eastern side of the building. William and Godfrey Notley built a landing to ship lumber and to receive goods at the location. It was used heavily between 1903 and 1907, and a small settlement grew up around it for a few years. But as the supply of readily harvestable tanbark and redwood dwindled, the doghole port was little used. It was abandoned in 1937 when Highway 1 was completed.
During Prohibition, a dance hall was located just south of the landing, “the wildest dance hall on the coast”, according to Big Sur historian Jeff Norman. “During the Prohibition era, the landing served the needs of Carmel’s drought-stricken populace. It was conveniently close, but just outside the effective limits of police scrutiny.” The bar developed a notorious reputation, and “was frequented by the lime kiln workers, mainly Italians, and every Sunday morning dead Italians would be found in the woods.”
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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 home loan 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 Monterey 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 likewise guarantees other loan programs used by personal loan providers. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers purchase a home– and refurbish it– all with a single home loan. House owners can likewise use the program to refinance their current home mortgage and add the cost of renovating tasks into the brand-new loan. FHA 203( k) loans come in two types:
- The limited 203( k) has an easier application process, and the repairs or improvements must amount to $35,000 or less.
- The basic 203( k) requires extra documents and applies to improvements costing more than $5,000, but the overall value of the property need to still fall within the FHA home loan limitation for the location.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home mortgage and is also guaranteed by the FHA. A HECM allows older house owners (aged 62 and up) with significant equity or those who own their houses outright to withdraw a portion of their house’s equity. The amount that will be readily available for withdrawal varies by debtor and depends on the age of the youngest customer or eligible non-borrowing spouse, current rate of interest and the lesser of the house’s assessed worth or the HECM FHA home loan limit or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA allow property buyers to purchase homes that are currently energy efficient, such as EnergyStar-certified structures. Or they can be used to purchase and remodel older homes with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a larger deposit.
- FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is geared at borrowers whose incomes will increase in time. You start out with smaller sized regular monthly payments that slowly increase. Five particular plans 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 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 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 ago. These limitations are described as “ceilings” and “floorings” that FHA will guarantee. FHA updates limit quantities each year in response to altering house costs.
FHA is required by law to adjust its amounts based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for standard home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations vary according to the cost of living in a particular location, and can be different from one county to the next. Areas with a greater cost of living will have higher limitations, and vice versa. Special 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 offer some versatility on FHA loan requirements to those who have actually suffered a severe financial difficulty or are struggling to make their payments.
That relief might be in the form of a short-lived duration of forbearance, a loan modification that would lower the rate of interest, extend the repayment duration, 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 Notleys Landing CA?
The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so lending companies are more willing to approve loans. However, mortgage lenders can (and do) set standards that may be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Notleys Landing CA, you might have better luck with another.
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 Notleys Landing 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
Customers get their home loans from FHA-approved lending institutions in Notleys Landing rather than the FHA itself, which only insures the loans. FHA-approved loan providers can have different rates and expenses, even for the very same loan.
FHA loans are readily available through many sources– from the biggest banks and credit unions to neighborhood banks and independent home loan loan providers. Costs, services and underwriting standards vary among loan providers or mortgage brokers, so it’s essential to shop around.
Discover more about how to discover low FHA home loan lender.