How To Qualify For FHA Loan in San Antonio California (Marin County)
Looking for an FHA Loan in San Antonio California?
FHA loans have been a flexible home loan 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 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 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 rise of foreclosures and defaults that happened in 1930s; to provide lenders with sufficient insurance; and to help grow the housing market by making home loans much more accessible and attainable for home-buyers with not so great credit or a low down payment due to FHA mortgage limits in San Antonio, 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 home loans 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.
(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 San Antonio 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 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 is that it’s an assumable home loan 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 Marin 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 mortgage 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 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 time frame. The 3/1 and 5/1 FHA Hybrid products allow 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 San Antonio California
Other Cities You May Be Interested In
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 Marin 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 Mortgage Loans
In addition to its popular FHA loan, the FHA likewise 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 help property buyers acquire a house– and refurbish it– all with a single mortgage. Homeowners can also use the program to refinance their current home mortgage and include the expense of remodeling tasks into the new loan. FHA 203( k) loans come in two types:
- The minimal 203( k) has an easier application process, and the repairs or improvements should total $35,000 or less.
- The standard 203( k) requires additional documents and applies to improvements costing more than $5,000, but the total worth of the property need to still fall within the FHA home loan limitation for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse home loan and is also guaranteed by the FHA. A HECM enables older house owners (aged 62 and up) with considerable equity or those who own their houses outright to withdraw a portion of their home’s equity. The amount that will be available for withdrawal differs by borrower and depends on the age of the youngest debtor or eligible non-borrowing spouse, existing interest rates and the lesser of the home’s evaluated worth or the HECM FHA home loan limit or list prices.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient mortgages backed by the FHA permit homebuyers to purchase houses that are already energy efficient, such as EnergyStar-certified buildings. 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 bigger deposit.
- FHA Section 245( a) loan – Also referred to as the Graduated Payment Mortgage, this program is tailored at borrowers whose incomes will increase in time. You start out with smaller sized regular monthly payments that gradually increase. 5 particular plans are offered: three strategies that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. Two other strategies set payment boosts 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 floor limitation for FHA loans in the majority of the country is $314,827, up from $294,515 in 2018. For high-cost areas, the ceiling is $726,525, up from $679,650 a year ago. These limits are referred to as “ceilings” and “floorings” that FHA will insure. FHA updates limit quantities each year in reaction to changing home prices.
FHA is needed by law to change its amounts based upon the loan limits set by the Federal Housing Finance Agency, or FHFA, for standard home mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations differ according to the expense of living in a particular location, and can be different from one county to the next. Locations with a greater expense of living will have higher limits, and vice versa. Special exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where house building is more costly.
FHA Loan Relief
Loan servicers can provide some flexibility on FHA loan requirements to those who have suffered a major monetary difficulty 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 decrease 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 San Antonio CA?
The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so lenders are more willing to approve home loans. However, mortgage companies can (and do) set standards that can be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near San Antonio CA, you might have better luck with choosing 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 San Antonio 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 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 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
Borrowers get their mortgage from FHA-approved lending institutions in San Antonio rather than the FHA itself, which only guarantees the loans. FHA-approved lending institutions can have various rates and costs, even for the very same loan.
FHA loans are offered through numerous sources– from the biggest banks and credit unions to community banks and independent home mortgage lending institutions. Expenses, services and underwriting requirements vary amongst lending institutions or home mortgage brokers, so it’s important to search.
Learn more about how to find low FHA home mortgage lending institution.