How To Qualify For FHA Loan in Pittsburg California (Contra Costa County)
Looking for an FHA Loan in Pittsburg 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 increase of foreclosures and defaults that happened in 1930s; to provide lenders with adequate insurance; and to help spark the housing market by making mortgages more accessible and attainable for people with less than perfect credit or a low down payment due to FHA mortgage limits in Pittsburg, 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, lenders can, and do, offer FHA home loans at beneficial 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 Pittsburg 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 mortgage 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 scenario.
Another advantage of an FHA mortgage is that it’s an assumable mortgage 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 Contra Costa 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 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 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 readjusts 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 very little even on a worst case rate change.
About Pittsburg California
In 1849, Colonel Jonathan D. Stevenson (from New York) bought the Rancho Los Medanos land grant, and laid out a town he called New York of the Pacific. By 1850, this venture failed. With the discovery of coal in the nearby town of Nortonville, the place became a port for coaling, and adopted the name Black Diamond, after the mining firm that built the Black Diamond Coal Mining Railroad from there to Nortonville. Because of the industrial potential of the site, a name change to Pittsburg was proposed in 1909.
Pittsburg, originally settled in 1839, was called first “New York Landing”, then “Black Diamond”, before citizens voted on “Pittsburg” on February 11, 1911. The name was selected to honor Pittsburgh, Pennsylvania, as the two cities’ shared a common steel and mining industrial heritage. This rechristening came at a time when the name of Pittsburgh, Pennsylvania was more commonly spelled without the “h”.
In 1910, Columbia Steel opened its California steel plant in Pittsburg with one foundry and a crew of 60 employees. It made steel castings for the dredging, lumber and shipping industries. In 1930, Columbia became a subsidiary of U.S. Steel Company. The plant continued to grow until the early 1950s, reaching a peak staff of 5,200 employees when the markets for its products crashed. The parent company (by 1986, renamed as USS Company) had merged with Korean Pohang Iron and Steel Company. Together they invested $450 million turning the Pittsburg plant into a modern flat-products mill, renamed as USS-Posco. As of 1999, the facility employed 970 workers and shipped over 1.6 million U.S. tons per year of steel to over 175 customers in the Western U. S., Mexico, Canada and the Pacific Rim.
The original town site fronts on the Sacramento/San Joaquin River Delta, reflecting its origins as a deep water channel river port. (As of January 1, 2007, state legislation [Assembly Bill 2324] enabled the city to manage its own riverfront for commercial development and subsequent port operations). Since the early 1900s, the city has grown inland to the south, then spread east and west along State Route 4, now a freeway carrying resident commuters to jobs in the San Francisco Bay-Oakland Region. In the process, the former town of Cornwall, California was absorbed. As of the 2000 census, the city had a total population of 56,769.
Camp Stoneman, located in the area, was a major staging area for the United States Army during World War II and the Korean War.
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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 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 Contra Costa 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 likewise guarantees other loan programs offered by private lenders. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers buy a house– and remodel it– all with a single mortgage. House owners can likewise use the program to refinance their current mortgage and include the cost of renovating jobs into the brand-new loan. FHA 203( k) loans come in two types:
- The restricted 203( k) has an easier application process, and the repair work or improvements should amount to $35,000 or less.
- The standard 203( k) needs extra paperwork and applies to enhancements costing more than $5,000, but the total value of the home must still fall within the FHA mortgage limit for the area.
- House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse mortgage and is likewise guaranteed by the FHA. A HECM allows older property owners (aged 62 and up) with significant equity or those who own their houses outright to withdraw a part of their home’s equity. The quantity that will be offered for withdrawal varies by customer and depends on the age of the youngest debtor or eligible non-borrowing spouse, current interest rates and the lesser of the home’s assessed value or the HECM FHA home loan limit or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA permit property buyers to acquire 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 bigger deposit.
- FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is geared at borrowers whose earnings will increase in time. You begin with smaller monthly payments that gradually go up. Five particular strategies are available: 3 plans that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. Two other plans set payment increases 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 flooring limit for FHA loans in most 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 ago. These limitations are described as “ceilings” and “floorings” that FHA will guarantee. FHA updates limit amounts each year in response to changing house prices.
FHA is required by law to adjust its amounts based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations differ according to the cost of living in a particular location, and can be various from one county to the next. Locations with a higher cost 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 expensive.
FHA Loan Relief
Loan servicers can offer some versatility on FHA loan requirements to those who have actually suffered a serious monetary challenge or are having a hard time to make their payments.
That relief might be in the form of a momentary period of forbearance, a loan modification that would lower the interest rate, 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 Pittsburg CA?
The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so mortgage 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 Pittsburg 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 Pittsburg 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 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 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 loan providers in Pittsburg instead of the FHA itself, which just guarantees the loans. FHA-approved lenders can have different rates and costs, even for the very same loan.
FHA loans are readily available through lots of sources– from the biggest banks and credit unions to neighborhood banks and independent home loan lenders. Expenses, services and underwriting standards differ among lenders or home mortgage brokers, so it’s essential to look around.
Learn more about how to find low FHA home loan lending institution.