How To Qualify For FHA Loan in Valley Home California (Stanislaus County)

How To Qualify For FHA Loan in Valley Home California (Stanislaus County)

Looking for an FHA Loan in Valley Home California?

An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). Popular with first-time home-buyers, FHA mortgages 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 worthiness, 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 companies with sufficient insurance; and to help spark the housing market by making home loans highly accessible and attainable for home-buyers with less than stellar credit or a low down payment due to FHA mortgage limits in Valley Home, California. Essentially, the federal government insures loans for FHA-approved mortgage lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.

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


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

Typically an FHA loan in Valley Home 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 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 Stanislaus 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 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 process.

The FHA Hybrid provides for an initial fixed interest rate for a period of three or five years, and then adjusts 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 Valley Home California

Valley Home is a census-designated place (CDP) in Stanislaus County, California. It is located about 8 miles (13 km) northwest of Oakdale, and named after the warm home feeling for the Central Valley. Valley Home sits at an elevation of 151 feet (46 m). The 2010 United States census reported Valley Home’s population was 228.

According to the United States Census Bureau, the CDP covers an area of 1.0 square miles (2.7 km), all of it land.

The 2010 United States Census reported that Valley Home had a population of 228. The population density was 222.4 people per square mile (85.9/km2). The racial makeup of Valley Home was 186 (81.6%) White, 2 (0.9%) African American, 3 (1.3%) Native American, 0 (0.0%) Asian, 0 (0.0%) Pacific Islander, 27 (11.8%) from other races, and 10 (4.4%) from two or more races. Hispanic or Latino of any race were 34 persons (14.9%).

The Census reported that 228 people (100% of the population) lived in households, 0 (0%) lived in non-institutionalized group quarters, and 0 (0%) were institutionalized.

There were 78 households, out of which 26 (33.3%) had children under the age of 18 living in them, 44 (56.4%) were opposite-sex married couples living together, 10 (12.8%) had a female householder with no husband present, 4 (5.1%) had a male householder with no wife present. There were 5 (6.4%) unmarried opposite-sex partnerships, and 1 (1.3%) same-sex married couples or partnerships. 11 households (14.1%) were made up of individuals, and 3 (3.8%) had someone living alone who was 65 years of age or older. The average household size was 2.92. There were 58 families (74.4% of all households); the average family size was 3.26.

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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 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 Stanislaus 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 offered by personal loan providers. Here’s a take a look at each of them.

  • FHA 203( k) loans – These FHA loans help property buyers acquire a home– and remodel it– all with a single mortgage. Property owners can also use the program to re-finance their existing home mortgage and include the cost of remodeling tasks into the new loan. FHA 203( k) loans can be found in 2 types:
    • The limited 203( k) has a simpler application procedure, and the repair work or enhancements need to total $35,000 or less.
    • The standard 203( k) needs extra documents and applies to enhancements costing more than $5,000, however the overall worth of the home should still fall within the FHA home mortgage limit for the area.
  • House Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home loan and is likewise guaranteed by the FHA. A HECM enables older homeowners (aged 62 and up) with significant equity or those who own their houses outright to withdraw a portion of their house’s equity. The amount that will be offered for withdrawal varies by borrower and depends on the age of the youngest debtor or qualified non-borrowing partner, present rate of interest and the lesser of the home’s appraised value or the HECM FHA home loan limit or prices.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient home mortgages backed by the FHA permit homebuyers to purchase homes that are already energy efficient, such as EnergyStar-certified buildings. Or they can be used to purchase 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 called the Graduated Payment Mortgage, this program is tailored at customers whose earnings will increase in time. You start out with smaller sized regular monthly payments that slowly go up. 5 specific strategies are readily available: 3 plans that permit 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. Two 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 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 changing house prices.

FHA is needed by law to change its quantities 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 floor limits vary according to the expense of living in a specific area, and can be different from one county to the next. Locations with a higher cost of living will have greater limits, and vice versa. Unique exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building and construction is more pricey.

FHA Loan Relief

Loan servicers can use some flexibility on FHA loan requirements to those who have suffered a severe financial hardship or are struggling to make their payments.

That relief might be in the form of a short-term duration of forbearance, a loan modification that would lower the rate of interest, extend the payback 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 Valley Home CA?

The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so mortgage companies are more willing to approve loans. However, mortgage lenders can (and do) set standards that may be stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Valley Home 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 Valley Home 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 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 attests good credit history and a solid track record of timely payments will likely be eligible for the mortgage.

How to Find FHA Lenders

Debtors get their home loans from FHA-approved lenders in Valley Home instead of the FHA itself, which just guarantees the loans. FHA-approved loan providers can have various rates and expenses, even for the same loan.

FHA loans are available through many sources– from the greatest banks and cooperative credit union to community banks and independent home loan lenders. Expenses, services and underwriting requirements differ among lenders or home mortgage brokers, so it’s crucial to look around.

Discover more about how to discover low FHA home mortgage lending institution.


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