How To Qualify For FHA Loan in Oakhurst California (Madera County)
Looking for an FHA Loan in Oakhurst California?
An FHA loan is a home loan 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 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 lenders with sufficient insurance; and to help grow the housing market by making mortgages highly accessible and affordable for consumers with less than stellar credit or a low down payment due to FHA mortgage limits in Oakhurst, 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, mortgage lenders can, and do, offer FHA mortgages 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.
(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 Oakhurst 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 approved 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 mortgage 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 Madera 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 mortgage loan programs will allow 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 procedure.
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 allow 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 Oakhurst California
Oakhurst was a common meeting ground for the Miwoks, Yokuts, and Monos before the time of the California Gold Rush.
Many Native Californians were displaced by white settlers following the enactment of the Act for the Government and Protection of Indians in 1850. This act facilitated the removal and displacement of Native Californian Indians from their traditional lands, and led to the Mariposa War, the first battle of which was fought near present-day Oakhurst on January 11, 1851. By June 1851, most Native Americans in the region had been relocated to the Fresno River Farm Reservation, opening the region to the first permanent white settlers.
Oakhurst’s existence began in 1858 as “Fresno Flats”, named for the Spanish word for ash trees and flat, a colloquial term for a mountain meadow.
Fresno Flats founding was not precipitated by the discovery of precious metals, unlike most other nearby towns founded in the nineteenth century along what came to be known as the Golden Chain Highway.
A rancher named John Robert Nichols is believed to be the first Anglo settler to permanently settle in the area in 1858. He was soon joined by others who raised hogs and sheep and planted orchards, making Fresno Flats a permanent settlement. The first post office opened in 1873. In 1874, the Madera Flume and Lumber Company began construction of a log flume alongside the Fresno River that gave rise to the local timber industry. In 1876, the wagon road from Madera to Yosemite was completed. From that point onward, tourism would steadily become the chief economic activity of the area.
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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 Madera 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 Mortgage Loans
In addition to its popular FHA loan, the FHA also insures other loan programs offered by private loan providers. Here’s a take 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 home loan. Homeowners can also use the program to refinance their current home mortgage and add the expense of renovating tasks into the brand-new loan. FHA 203( k) loans can be found in two types:
- The restricted 203( k) has a simpler application procedure, and the repairs or enhancements must amount to $35,000 or less.
- The basic 203( k) needs extra documentation and applies to enhancements costing more than $5,000, but the total worth of the home need to still fall within the FHA home mortgage limitation for the area.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse mortgage and is also guaranteed by the FHA. A HECM allows older property owners (aged 62 and up) with considerable 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 debtor and depends on the age of the youngest customer or qualified non-borrowing partner, existing rate of interest and the lesser of the home’s evaluated worth or the HECM FHA home loan limitation or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA allow homebuyers to buy homes that are currently energy efficient, such as EnergyStar-certified structures. Or they can be used to buy and renovate older houses 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 known as the Graduated Payment Mortgage, this program is geared at customers whose earnings will increase over time. You start with smaller sized month-to-month payments that slowly increase. 5 specific strategies are available: three plans that allow 5 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 yearly.
(Or call 213-474-7389 to ask a local lender anything!)
FHA Loan Limits for 2022
For 2019, the floor limitation for FHA loans in most 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 described as “ceilings” and “floors” that FHA will insure. FHA updates limit quantities each year in action to altering house prices.
FHA is needed by law to adjust its amounts based upon the loan limits set by the Federal Housing Finance Agency, or FHFA, for traditional mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations vary according to the expense of living in a specific area, and can be different from one county to the next. Areas with a greater expense of living will have greater 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 use some versatility on FHA loan requirements to those who have actually suffered a severe financial challenge or are having a hard time to make their payments.
That relief might be in the form of a short-term period of forbearance, a loan adjustment that would reduce the rate of interest, 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 Oakhurst CA?
The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so mortgage 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 Oakhurst 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 Oakhurst to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the mortgage loan but these loans are geared towards lower income applicants. 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 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 shows good credit history and a solid track record of timely payments will likely be eligible for the home loan.
How to Find FHA Lenders
Debtors get their home loans from FHA-approved lending institutions in Oakhurst rather than the FHA itself, which only guarantees the loans. FHA-approved loan providers can have different rates and expenses, even for the same loan.
FHA loans are readily available through lots of sources– from the greatest banks and credit unions to community banks and independent mortgage lending institutions. Expenses, services and underwriting standards vary amongst loan providers or mortgage brokers, so it’s important to shop around.
Discover more about how to find low FHA home mortgage loan provider.