How To Qualify For FHA Loan in Pine Mountain Club California (Kern County)
Looking for an FHA Loan in Pine Mountain Club California?
An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA mortgages require more flexible minimum credit scores and down payments than many conventional loans.
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 important to remember though, that the lower the credit score, the higher the interest borrowers will receive. 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 lenders with adequate insurance; and to help spark the housing market by making home loans highly accessible and affordable for home-buyers with not so great credit or a low down payment due to FHA mortgage limits in Pine Mountain Club, 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 home loan payments.
Because of that insurance, mortgage lenders 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 Pine Mountain Club is one of the easiest types of mortgage loans to get approved 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 loan.
Consumers 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 mortgage 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 Kern 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 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 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 period. 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 modification. This insures that the payment adjustment will be very little even on a worst case rate change.
About Pine Mountain Club California
Pine Mountain Club was developed in 1971 by Tenneco. The first announcement was made from Houston, Texas, in April of that year when the company said it would develop “more than 1.1 million acres of land in Arizona and Southern California.” Tenneco was the Bakersfield-based western land-development arm of Tenneco, Inc., of Houston.
About half that acreage was to be in Kern County, where the projects would include the residential development of 6,500 acres surrounding the then-new California State College near Bakersfield and 3,200 acres in the Los Padres National Forest, also mostly for residences (Pine Mountain Club).
The forest project was to set aside a thousand acres for vacation home sites and 2,200 acres “for permanent preservation in their natural state.” The program was to be directed by John E. Sommerhalder, president of Tenneco West. The land was part of a 3,200-acre tract of pine forest and meadowland, formerly a private preserve.
Tenneco West was a Bakersfield subsidiary that administered all the western holdings of Tenneco, “the parent, Houston-based, multi-industry company.”
Tenneco West President Sommerhalder said the club was believed to be among the largest all-electric family recreational resorts in California. Three kinds of “vacation or weekend homesites” were to be offered: (1) One- to three-bedroom dwellings, (2) modular homes, and (3) space for mobile homes.
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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 Kern 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 Home Loans
In addition to its popular FHA loan, the FHA likewise guarantees other loan programs offered by personal lenders. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans help homebuyers buy a home– and renovate it– all with a single home loan. House owners can also utilize the program to refinance their existing mortgage and include the cost of redesigning tasks into the new loan. FHA 203( k) loans come in two types:
- The limited 203( k) has a simpler application process, and the repairs or improvements need to total $35,000 or less.
- The standard 203( k) needs additional documents and applies to enhancements costing more than $5,000, however the total worth of the residential or commercial property must still fall within the FHA home mortgage limit for the area.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home loan and is likewise insured by the FHA. A HECM permits older homeowners (aged 62 and up) with considerable equity or those who own their homes outright to withdraw a portion of their home’s equity. The quantity that will be offered for withdrawal differs by customer and depends upon the age of the youngest customer or eligible non-borrowing spouse, current interest rates and the lesser of the home’s assessed worth or the HECM FHA home mortgage limit or prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA enable homebuyers to buy homes that are already energy efficient, such as EnergyStar-certified structures. Or they can be utilized to purchase and remodel older homes 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 tailored at borrowers whose earnings will increase with time. You start out with smaller sized monthly payments that slowly increase. 5 specific strategies are available: 3 strategies that enable five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. Two other plans set payment increases 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 country is $314,827, up from $294,515 in 2018. For high-cost locations, the ceiling is $726,525, up from $679,650 a year earlier. These limitations are described as “ceilings” and “floorings” that FHA will guarantee. FHA updates limit amounts each year in response to changing home rates.
FHA is needed by law to adjust its quantities based on the loan limits set by the Federal Housing Finance Agency, or FHFA, for conventional mortgages ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations differ according to the expense of living in a certain area, and can be various from one county to the next. Locations with a higher expense of living will have higher limits, 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 offer some versatility on FHA loan requirements to those who have actually suffered a major financial challenge or are struggling to make their payments.
That relief might be in the form of a momentary duration of forbearance, a loan adjustment that would reduce the interest rate, 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 Pine Mountain Club CA?
The FHA makes it relatively easy to qualify for a mortgage loan. Again, the government guarantees the loan, so lenders are more willing to approve home loans. However, mortgage lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Pine Mountain Club CA, you might have better luck with choosing 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 Pine Mountain Club 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 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 home mortgage from FHA-approved lenders in Pine Mountain Club rather than the FHA itself, which only insures the loans. FHA-approved loan providers can have various rates and expenses, even for the very 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. Expenses, services and underwriting requirements differ amongst loan providers or home loan brokers, so it’s essential to shop around.
Discover more about how to discover low FHA home mortgage loan provider.