How To Qualify For FHA Loan in Rancho Mirage California (Riverside County)

How To Qualify For FHA Loan in Rancho Mirage California (Riverside County)

Looking for an FHA Loan in Rancho Mirage California?

FHA loans have been a flexible home loan program that’s been around since the 1930’s and is protected 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 mortgage companies with adequate insurance; and to help spark 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 Rancho Mirage, 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 mortgage payments.

Because of that insurance, mortgage lenders can, and do, offer FHA mortgages 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 Rancho Mirage 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.

Consumers 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 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 Riverside 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 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 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 process.

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 modification. This insures that the payment adjustment will be very little even on a worst case rate change.

About Rancho Mirage California

Native Americans came to the area 2,000 years ago. The local tribe in Rancho Mirage is the Agua Caliente Indian tribe of Cahuilla Indians. The tribe was almost annihilated by smallpox in 1862–63 but survived, establishing a resort and casino within the city limits. An ancient Native-American trade route, the Halchidhoma trade route, follows the water holes and water springs along the foothills of the Santa Rosa Mountains. This trail is now partially California State Route 111 in Rancho Mirage. The trade route originally reached from the Pacific Ocean in the west to central Arizona, and was used for centuries for trading, food, and for religious purposes. About 1,000 years ago, the local Cahuilla tribes were introduced to pottery from Native American tribes by the Colorado River. The Spaniards also knew of the Coco-Mariposa Trail in the 1820s when they would send letters by Cahuilla runners along the trail to the mission in Tucson, Arizona. The natural environment in Rancho Mirage has supplied the Cahuilla people with various water sources. Although rare in such arid desert environments, the Cahuilla had access to Magnesia Spring in Magnesia Spring Canyon, which is 1.5 miles from Whitewater River. In addition, a variety of natural springs are situated along the San Andreas Fault line near Indio Hills.

Throughout the 1920s, the area was a desert area dotted with date and grape ranches. In 1928, 160 acres (65 ha) here were purchased by the Southland Land and Realty Company. Access was planned by camel on roads given North-African names, including Tunis Road, Tangier Road, and Sahara Road. The 1929 Depression put an end to the plans. A few years later, a Los Angeles realtor, Lawrence Macomber, purchased hundreds of acres here. Along with Don Cameron, the two began offering property here advertised as “fifteen minutes from Palm Springs, CA.” They were able to attract actor Frank Morgan, among others, until the onset of World War II brought development to an end once again. In 1944, hundreds of acres were bought by Major A. Ronald Button. He described it as “the most wind free area I could find in the desert.” Two years later, in 1946, Henry L. Gogerty established an airstrip here and later launched the Desert Air Hotel and Airpark.

The Annenberg Estate or ‘Sunnylands’, owned by philanthropists Walter and Leonore Annenberg, was popular with the wealthy and powerful, including Frank Sinatra, Bob Hope, Fred Astaire, Ginger Rogers, Patrick Macnee, Zeppo Marx and Mary Martin. Several U.S. Presidents vacationed at the Annenberg estate, including Richard Nixon, Ronald Reagan, and Gerald Ford. President Ford later bought a house in Rancho Mirage and was living there at the time of his death in 2006. The Betty Ford Center, an addiction rehabilitation center, is located in Rancho Mirage at the Eisenhower Medical Center. President Barack Obama also used Sunnylands for summit meetings with world leaders during his administration.

Some of the first places of accommodation to be established were the White Sun Guest Ranch and Wonder Palms Ranch, and later Desert Air Hotel and Thunderbird Ranch in the 1940s. The 320-acre Desert Air Hotel was purchased by the Rancho Las Palmas Country Club in the 1970s. Rancho Las Palmas has Spanish architecture consisting of wood walls, Saltillo tiles, and high ceilings. The resort, which is the city’s third-largest employer, is located on a 249-acre property in the center of Rancho Mirage, across Bob Hope Drive from The River, an outdoor shopping center. It has a 27-hole golf course.

Thunderbird Ranch, which opened in 1946, was purchased by Johnny Dawson, who established Coachella Valley’s first 18-hole golf course. Thunderbird Country Club was established in 1950, and the golf cart or electric golf cart is rumored to have been invented at Thunderbird. Ford Thunderbird is also named for the country club. Tamarisk Country Club soon followed in the 1950s, and later an array of country clubs were established in the city: Desert Island Golf and Country Club in 1971, Sunrise Country Club in 1974, Mission Hills Country Club in 1979, the Club at Morningside (1982), Rancho Mirage Country Club (1985), and Westin Mission Hills Resort and Spa (1987). Rancho Mirage was incorporated in 1973 from a merger of five unincorporated areas known as the “Cove communities” (Rancho Mirage, Desert, Palmas, Tamarisk, and Thunderbird), and had 3,000 permanent residents at the time.

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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 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 Riverside 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 insures 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 acquire a home– and remodel it– all with a single home mortgage. Property owners can likewise use the program to re-finance their existing home loan and add the cost of remodeling jobs into the new loan. FHA 203( k) loans come in 2 types:
    • The minimal 203( k) has an easier application process, and the repairs or enhancements must amount to $35,000 or less.
    • The standard 203( k) needs additional documents and applies to improvements costing more than $5,000, however the total worth of the home must still fall within the FHA home mortgage limitation for the location.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home loan and is likewise guaranteed by the FHA. A HECM enables older homeowners (aged 62 and up) with substantial equity or those who own their houses outright to withdraw a part of their house’s equity. The quantity that will be readily available for withdrawal varies by debtor and depends on the age of the youngest borrower or qualified non-borrowing partner, present rates of interest and the lesser of the house’s appraised worth or the HECM FHA mortgage limitation or list prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA allow property buyers to acquire houses that are already energy efficient, such as EnergyStar-certified buildings. Or they can be utilized to purchase 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 referred to as the Graduated Payment Mortgage, this program is tailored at customers whose earnings will increase in time. You start out with smaller monthly payments that gradually go up. 5 particular strategies are readily available: 3 plans that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. 2 other strategies 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 floor limit for FHA loans in the majority of the nation is $314,827, up from $294,515 in 2018. For high-cost areas, the ceiling is $726,525, up from $679,650 a year back. These limits are described as “ceilings” and “floorings” that FHA will guarantee. FHA updates restrict amounts each year in response to altering home prices.

FHA is required by law to change its quantities based upon the loan limits set by the Federal Housing Finance Agency, or FHFA, for traditional home loans guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limits differ according to the cost of living in a specific area, and can be different from one county to the next. Areas with a greater cost of living will have higher limits, and vice versa. Unique exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building is more pricey.

FHA Loan Relief

Loan servicers can provide some versatility on FHA loan requirements to those who have suffered a severe financial challenge or are having a hard time to make their payments.

That relief might be in the form of a momentary duration of forbearance, a loan modification that would reduce 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 Rancho Mirage CA?

The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so mortgage lenders are more willing to approve mortgages. However, lending companies can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Rancho Mirage CA, you might have better luck with looking around for another.

Note: you never know until you put in an application. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender in Rancho Mirage 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 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 loan providers in Rancho Mirage instead of the FHA itself, which only guarantees the loans. FHA-approved lenders can have different rates and costs, even for the same loan.

FHA loans are offered through numerous sources– from the greatest banks and credit unions to community banks and independent mortgage lending institutions. Expenses, services and underwriting requirements differ amongst loan providers or mortgage brokers, so it’s essential to shop around.

Learn more about how to find low FHA home mortgage loan provider.


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