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

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

Looking for an FHA Loan in Riverside California?

FHA loans have been a flexible mortgage 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 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 mortgage lenders with adequate insurance; and to help grow the housing market by making mortgages much more accessible and affordable for home-buyers with less than perfect credit or a low down payment due to FHA mortgage limits in Riverside, 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 mortgage payments.

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


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

Typically an FHA loan in Riverside 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 loan which means if you want to sell your home, 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 aggressive 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 changes 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 adjustment. This insures that the payment adjustment will be very little even on a worst case rate change.

About Riverside California

In the late 1700s and early 1800s the area was inhabited by Cahuilla and the Serrano people. Californios such as Bernardo Yorba and Juan Bandini established ranches during the first half of the 19th century.

In the 1860s, Louis Prevost launched the California Silk Center Association, a short-lived experiment in sericulture. In the wake of its failure, John W. North purchased some of its land and formed the Southern California Colony Association to promote the area’s development. In March 1870, North distributed posters announcing the formation of a colony in California. North, a staunch temperance-minded abolitionist from New York State, had formerly founded Northfield, Minnesota. Riverside was temperance-minded, and Republican. There were four saloons in Riverside when it was founded. The license fees were raised until the saloons moved out of Riverside. Investors from England and Canada transplanted traditions and activities adopted by prosperous citizens. As a result, the first golf course and polo field in southern California were built in Riverside.

The first orange trees were planted in 1871, with the citrus industry Riverside is famous for beginning three years later (1874) when Eliza Tibbets received three Brazilian navel orange trees sent to her by a personal friend, William Saunders, a horticulturist at the United States Department of Agriculture in Washington, D.C. The trees came from Bahia, Brazil. The Bahia orange did not thrive in Florida, but its success in southern California was phenomenal.

The three trees were planted on the Tibbets’ property. One of them died after it was trampled by a cow during the first year it was planted. After the trampling, the two remaining trees were transplanted to property belonging to Sam McCoy to receive better care than L.C. Tibbets, Eliza’s husband, could provide. Later, the trees were again transplanted, one at the Mission Inn property in 1903 by President Theodore Roosevelt (this tree died in 1922), and the other at the intersection of Magnolia and Arlington avenues. Eliza Tibbets was honored with a stone marker placed with the last tree. That tree still stands to this day inside a protective fence abutting what is now a major intersection.

The trees thrived in the southern California climate and the navel orange industry grew rapidly. Many growers purchased bud wood and then grafted the cuttings to root stock. Within a few years, the successful cultivation of many thousands of the newly discovered Brazilian navel orange trees led to a California Gold Rush of a different kind: the establishment of the citrus industry, which is commemorated in the landscapes and exhibits of the California Citrus State Historic Park and the restored packing houses in the downtown’s Marketplace district. By 1882, there were more than half a million citrus trees in California, almost half of which were in Riverside. The development of refrigerated railroad cars and innovative irrigation systems established Riverside as the richest city in the United States (in terms of income per capita) by 1895.

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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 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.


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Kinds Of FHA Home Loans

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

  • FHA 203( k) loans – These FHA loans assist property buyers purchase a home– and remodel it– all with a single mortgage. House owners can likewise use the program to re-finance their current mortgage and add the cost of renovating projects into the new loan. FHA 203( k) loans been available in 2 types:
    • The limited 203( k) has an easier application procedure, and the repair work or improvements must amount to $35,000 or less.
    • The basic 203( k) requires additional paperwork and applies to enhancements costing more than $5,000, but the overall value of the home must still fall within the FHA home loan limitation for the location.
  • Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home mortgage and is also guaranteed by the FHA. A HECM enables older property owners (aged 62 and up) with significant equity or those who own their homes outright to withdraw a portion of their house’s equity. The amount that will be readily available for withdrawal differs by debtor and depends upon the age of the youngest borrower or eligible non-borrowing partner, present interest rates and the lower of the home’s assessed worth or the HECM FHA mortgage limitation or sales price.
  • FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA allow homebuyers to purchase homes that are currently energy efficient, such as EnergyStar-certified structures. Or they can be utilized to purchase and remodel 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 geared at debtors whose incomes will increase in time. You begin with smaller monthly payments that slowly go up. 5 specific plans are offered: three plans that enable 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. 2 other strategies set payment increases over 10 years at 2 percent and 3 percent each year.

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FHA Loan Limits for 2023

For 2019, the flooring 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 “floors” that FHA will guarantee. FHA updates limit amounts each year in reaction to changing house prices.

FHA is needed by law to adjust its amounts based on the loan limitations 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 limitations vary according to the expense of living in a certain location, and can be various from one county to the next. Locations with a greater cost of living will have higher limits, and vice versa. Special exceptions are produced real estate in Alaska, Hawaii, Guam and the Virgin Islands, where house building and construction is more pricey.

FHA Loan Relief

Loan servicers can offer some flexibility on FHA loan requirements to those who have suffered a major monetary difficulty or are having a hard time to make their payments.

That relief might be in the form of a short-lived duration of forbearance, a loan modification that would reduce the rates of interest, 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 Riverside CA?

The FHA makes it relatively easy to qualify for a home loan. Again, the government guarantees the loan, so lenders are more willing to approve mortgage loans. However, lenders can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Riverside CA, you might have better luck with choosing 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 Riverside to find out for sure.

Income limits: there are none. You’ll need enough to show that you can repay the home loan but these loans are geared towards lower income applicants. 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 qualifications 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

Borrowers get their mortgage from FHA-approved loan providers in Riverside 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 readily available through lots of sources– from the biggest banks and credit unions to neighborhood banks and independent home loan loan providers. Costs, services and underwriting requirements differ among lending institutions or home loan brokers, so it’s crucial to search.

Learn more about how to discover low FHA mortgage lending institution.


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