How To Qualify For FHA Loan in Swansea California (Inyo County)
Looking for an FHA Loan in Swansea 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 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 requirements.
The FHA program was created in response to the rise of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with sufficient insurance; and to help stimulate the housing market by making home loans highly accessible and attainable for home-buyers with not so great credit or a low down payment due to FHA mortgage limits in Swansea, 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, mortgage companies can, and do, offer FHA home loans 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 Swansea 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 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 loan 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 Inyo 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 enable 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 process.
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 time frame. 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 Swansea California
Swansea is a former settlement and unincorporated community in Inyo County, California. It is located 8.5 miles (14 km) south of New York Butte, at an elevation of 3,661 ft (1,116 m).
Swansea was a boomtown located on the eastern shore of Owens Lake. Spawned by the success of the silver mining operations in the nearby Cerro Gordo Mines in the late 1860s, Swansea became a hub for smelting the ore and transporting the resulting ingots to Los Angeles, over 200 miles away. The smelter operated from 1869 to 1874.
Swansea was named after the town Swansea in south Wales, which was known as “Copperopolis” due to its large smelting industry from which many experienced extractive metallurgists emigrated to the United States.
The 1872 Lone Pine earthquake damaged the smelters and uplifted the shoreline, rendering the Swansea pier inaccessible by Owens Lake steamships. As a result, most of the smelting and transportation business moved to Keeler, approximately one mile to the south.
In the summer of 1874, a thunderstorm-induced debris flow inundated Swansea under several feet of water, rock, and sand. By then the town had been almost deserted, and the debris flow marked the end of Swansea.
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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 Inyo 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 Loans
In addition to its popular FHA loan, the FHA likewise insures other loan programs provided by personal loan providers. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers buy a home– and refurbish it– all with a single mortgage. Property owners can also utilize the program to refinance their current home mortgage and add the expense of remodeling jobs into the new loan. FHA 203( k) loans come in two types:
- The restricted 203( k) has a simpler application process, and the repair work or enhancements need to total $35,000 or less.
- The basic 203( k) needs extra paperwork and applies to improvements costing more than $5,000, but the overall worth 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 mortgage and is also insured by the FHA. A HECM permits older property owners (aged 62 and up) with substantial equity or those who own their houses outright to withdraw a portion of their house’s equity. The quantity that will be readily available for withdrawal differs by borrower and depends upon the age of the youngest debtor or qualified non-borrowing partner, current rate of interest and the lower of the house’s evaluated value or the HECM FHA home mortgage limit or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective home mortgages backed by the FHA allow homebuyers to buy homes that are already energy efficient, such as EnergyStar-certified structures. Or they can be utilized to purchase and redesign 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 geared at debtors whose incomes will increase over time. You start with smaller regular monthly payments that gradually increase. Five particular plans are readily available: 3 strategies that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. 2 other plans set payment boosts 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 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 earlier. These limitations are referred to as “ceilings” and “floors” that FHA will guarantee. FHA updates restrict amounts each year in reaction to changing home rates.
FHA is required by law to change its amounts based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional mortgages ensured 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 higher expense of living will have higher 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 major financial hardship or are having a hard time to make their payments.
That relief might be in the form of a short-term period of forbearance, a loan adjustment that would reduce the rate of interest, extend the repayment period, 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 Swansea CA?
The FHA makes it relatively simple to qualify for a loan. Again, the government guarantees the loan, so 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 Swansea 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 Swansea 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 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 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 mortgage.
How to Find FHA Lenders
Borrowers get their home mortgage from FHA-approved loan providers in Swansea rather than the FHA itself, which just insures the loans. FHA-approved lending institutions can have various rates and costs, even for the same loan.
FHA loans are offered through lots of sources– from the most significant banks and credit unions to community banks and independent mortgage lenders. Costs, services and underwriting standards vary among loan providers or home mortgage brokers, so it’s crucial to search.
Learn more about how to find low FHA mortgage lender.