How To Qualify For FHA Loan in Rio Dell California (Humboldt County)

How To Qualify For FHA Loan in Rio Dell California (Humboldt County)

Looking for an FHA Loan in Rio Dell California?

FHA loans have been a flexible mortgage 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 credit rating 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 sufficient insurance; and to help spark the housing market by making home loans much more accessible and affordable for home-buyers with less than stellar credit or a low down payment due to FHA mortgage limits in Rio Dell, California. Essentially, the federal government insures loans for FHA-approved mortgage companies in order to reduce their risk of loss if a borrower defaults on their home loan payments.

Because of that insurance, mortgage companies can, and do, offer FHA mortgages at really attractive 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.


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Benefits of FHA Loans: Low Down Payments and Less Strict Credit Score Requirements

Typically an FHA loan in Rio Dell 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 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 mortgage 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 Humboldt 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 home 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 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 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 Rio Dell California

Rio Dell derives its name from the historic Rio Dell Hotel. Its owner, businessman Lorenzo Painter, devised the name as a merging of Spanish río (“river”) and English dell (“small wooded valley”).

The first post office at Rio Dell opened in 1876. Rio Dell was connected to Scotia by a ferry provided by the lumber mill in Scotia. After the first bridge was destroyed by a flood in 1905, a ferry carried mill workers from Rio Dell upstream to Scotia, and a second ferry carried mill workers downstream to Metropolitan until a suspension bridge was built to Scotia in 1914. Many Italian immigrants lived in what came to be known as Wildwood, south of Rio Dell proper, and known at the time to outsiders as Little Italy. This part of town became popular with mill workers seeking moonshine, gambling, and prostitution unavailable in the company town of Scotia where they were employed. Men came from as far away as Eureka to enjoy these illegal entertainments, or to engage in recreational fighting, the downtown very soon becoming known as Wildwood. Rio Dell’s main street still carries the name Wildwood Avenue. In 1928 buildings on both sides of this street were engulfed by a fire started by a moonshine still. The fire endangered the bridge to Scotia and prevented the Scotia Fire Department from crossing the bridge to help extinguish the fire. Since there was no help forthcoming, many residents took to throwing their bootlegged wine on the fire in a desperate attempt to douse it.

Rio Dell became home to the workforce for one of the largest lumber mills in the world, the Pacific Lumber Company. It was often the first home of immigrants to the United States and Humboldt County, particularly for the young Italian and Portuguese immigrant workforce of the early 20th century. Rio Dell was incorporated in 1965 as a result of changing demographics, a post-war population expansion and the reluctance of the local Sheriff to provide law enforcement services to what was perceived as a dangerous and remote community. The primary benefit of municipal incorporation being a city’s ability to create its own armed police department under local control. The department totaled 14 sworn officers shortly after obtaining city status. Following the city’s incorporation in 1965 a series of events over the next two decades led to the economic decline of the community, including the opening of a new freeway bypass and the eventual demise of Pacific Lumber Company (Palco) as a significant employer.

In 2018 Rio Dell became home to iCannBe.

According to the United States Census Bureau, the city has a total area of 2.4 square miles (6.2 km), of which 2.3 square miles (6.0 km2) of it is land and 0.1 square miles (0.26 km) of it (5.61%) is water.

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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 house. 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 Humboldt 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 Loans

In addition to its popular FHA loan, the FHA also guarantees other loan programs provided by personal loan providers. Here’s a take a look at each of them.

  • FHA 203( k) loans – These FHA loans assist property buyers buy a house– and renovate it– all with a single home loan. Property owners can likewise utilize the program to refinance their existing home loan and include the expense of renovating projects into the brand-new loan. FHA 203( k) loans can be found in two types:
    • The limited 203( k) has an easier application process, and the repairs or enhancements must total $35,000 or less.
    • The standard 203( k) requires additional documents and applies to enhancements costing more than $5,000, but the overall value of the residential or commercial property must still fall within the FHA home mortgage limitation for the area.
  • 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 enables older homeowners (aged 62 and up) with considerable equity or those who own their homes outright to withdraw a part of their home’s equity. The amount that will be available for withdrawal varies by borrower and depends on the age of the youngest customer or qualified non-borrowing spouse, current rate of interest and the lower of the house’s evaluated value or the HECM FHA home mortgage limitation or sales price.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA allow property buyers to acquire houses that are currently energy efficient, such as EnergyStar-certified structures. Or they can be utilized to buy and remodel older homes with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a larger down payment.
  • FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is geared at debtors whose incomes will increase gradually. You start with smaller sized regular monthly payments that slowly increase. Five specific plans are offered: three plans that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent each year. 2 other strategies set payment boosts over 10 years at 2 percent and 3 percent each year.

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FHA Loan Limits for 2023

For 2019, the floor 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 back. These limits are described as “ceilings” and “floors” that FHA will insure. FHA updates limit amounts each year in reaction to changing home costs.

FHA is required by law to adjust its amounts based on 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 floor limits vary according to the expense of living in a particular area, and can be different from one county to the next. Areas with a greater cost of living will have greater limitations, and vice versa. Special exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where house construction is more pricey.

FHA Loan Relief

Loan servicers can use some versatility on FHA loan requirements to those who have actually suffered a serious monetary difficulty 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 adjustment that would lower the interest rate, extend the repayment 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 Rio Dell CA?

The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so lenders are more willing to approve loans. 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 Rio Dell CA, you might have better luck with looking around for 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 Rio Dell 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 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 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 proves 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 mortgage from FHA-approved lending institutions in Rio Dell rather than the FHA itself, which only insures the loans. FHA-approved lenders can have various rates and costs, even for the same loan.

FHA loans are available through many sources– from the most significant banks and cooperative credit union to community banks and independent mortgage lending institutions. Expenses, services and underwriting requirements vary amongst lending institutions or mortgage brokers, so it’s crucial to look around.

Find out more about how to discover low FHA home loan lending institution.


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