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

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

Looking for an FHA Loan in Thermal 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). Popular with first-time home-buyers, FHA home loans require lower minimum credit scores and down payments than many commonplace loans.

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 significant 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 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 mortgages highly accessible and affordable for consumers with less than stellar credit or a low down payment due to FHA mortgage limits in Thermal, 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 lenders can, and do, offer FHA home loans at really attractive mortgage 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 Thermal 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 mortgage.

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 mortgage 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 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 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 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 make it possible for 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 Thermal California

Thermal (originally Kokell): 114  began as a railroad camp in 1910 for employees of the Southern Pacific Railroad, followed by Mecca (originally called Walters) in 1915 and Arabia in between, each with about 1,000 residents. Permanent dwellings were soon established on Avenue 56 (renamed Airport Boulevard), former U.S. Route 99 (State Route 86) and State Route 111 by the 1930s.

Agricultural development from canal irrigation made the area thrive in greenery by the 1950s, followed by the former Camp Young U.S. Naval Air station converted into Thermal Airport by 1965. In the early 1990s, a four-lane highway (State Route 86) was constructed over an earlier transportation route. There is a proposal for a major commercial aviation Airport known as the Jackie Cochran-Desert Cities Regional Airport on the same site.

An auto racetrack and club, a members-only racetrack near Jacqueline Cochran Regional Airport (Thermal Club), is under development and is being built on land originally owned by the Kohl family (owners of Kohl Department stores) and built-in partnership with them. The Kohls still own significant property in this area.

According to the United States Census Bureau, the CDP covers an area of 9.5  square miles (25.5  km), all of its land.

Thermal has a desert climate (BWh according to the Köppen climate classification). High mountain ranges on three sides contribute to its unique and year-round warm climate, with some of the warmest winters west of the Rocky Mountains. Its average annual high temperature is 88.7 °F (31.5 °C) and its average annual low is 56.3 °F (13.5 °C). Summer highs above 110 °F (43 °C) occur on average 28 days per year and exceed 120 °F (49 °C) every other year. Summer nights often stay above 80 °F (27 °C). Winters are warm with daytime highs rarely below 60 °F (16 °C), although light freezes happen every year. The average annual precipitation is under 3 inches (76 mm), with over 348 days of sunshine per year. The hottest temperature ever recorded in the area was 126 °F (52 °C) on July 28, 1995 and the coldest is 14 °F (−10 °C) on December 23, 1990.

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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 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 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!)

Types of FHA Loans

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

  • FHA 203( k) loans – These FHA loans assist homebuyers acquire a home– and refurbish it– all with a single home loan. House owners can also utilize the program to re-finance their current home loan and include the expense of redesigning projects into the new loan. FHA 203( k) loans can be found in two types:
    • The restricted 203( k) has a much easier application procedure, and the repair work or enhancements must total $35,000 or less.
    • The standard 203( k) needs additional documentation and applies to enhancements costing more than $5,000, however the total value of the property must still fall within the FHA home loan limitation for the area.
  • House 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 property owners (aged 62 and up) with substantial equity or those who own their homes outright to withdraw a part of their house’s equity. The quantity that will be offered for withdrawal differs by borrower and depends on the age of the youngest debtor or eligible non-borrowing spouse, current interest rates and the lower of the house’s appraised value or the HECM FHA home mortgage limit or prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient home loans backed by the FHA permit property buyers to buy houses that are already energy efficient, such as EnergyStar-certified buildings. Or they can be utilized to buy and renovate older houses with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a larger deposit.
  • FHA Section 245( a) loan – Also called the Graduated Payment Mortgage, this program is tailored at customers whose incomes will increase with time. You start with smaller sized regular monthly payments that gradually increase. Five specific strategies are readily available: three plans that allow five years of increasing payments at 2.5 percent, 5 percent and 7.5 percent every year. Two other plans set payment increases over 10 years at 2 percent and 3 percent annually.

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FHA Loan Limits for 2022

For 2019, the floor limitation for FHA loans in most of the nation is $314,827, up from $294,515 in 2018. For high-cost locations, the ceiling is $726,525, up from $679,650 a year ago. These limitations are described as “ceilings” and “floors” that FHA will insure. FHA updates restrict amounts each year in action to altering house prices.

FHA is needed by law to change its amounts based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for conventional home loans ensured or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limits differ according to the cost of living in a certain 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. 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 provide some versatility on FHA loan requirements to those who have actually suffered a severe financial difficulty or are struggling to make their payments.

That relief might be in the form of a short-lived duration of forbearance, a loan modification that would decrease the rate 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 Thermal CA?

The FHA makes it relatively simple to qualify for a loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve loans. However, lending companies can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Thermal CA, you might have better luck with shopping around for a better option.

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 Thermal to find out for sure.

Income limits: there are none. You’ll need enough to show that you can repay the mortgage 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 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 demonstrates good credit history and a solid track record of timely payments will likely be eligible for the mortgage.

How to Find FHA Lenders

Customers get their home loans from FHA-approved loan providers in Thermal 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 many sources– from the greatest banks and credit unions to community banks and independent home mortgage loan providers. Costs, services and underwriting requirements vary among loan providers or mortgage brokers, so it’s crucial to shop around.

Learn more about how to find low FHA home mortgage lender.


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