How To Qualify For FHA Loan in Ventura California (Santa Clara County)
Looking for an FHA Loan in Ventura 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 loans require lower minimum credit scores and down payments than many conventional 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 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 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 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 spark the housing market by making mortgages highly accessible and attainable for home-buyers with less than perfect credit or a low down payment due to FHA mortgage limits in Ventura, 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 lenders can, and do, offer FHA mortgages 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 Ventura 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 loan is that it’s an assumable 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 Santa Clara 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 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 relative, 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 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 Ventura California
Archaeological discoveries in the area suggest that humans have populated the region for at least 10,000–12,000 years. Archaeological research demonstrates that the Chumash people have deep roots in central and southern coastal regions of California, and has revealed artifacts from their culture. Shisholop Village, designated Historic Point of Interest #18 by the city at the foot of nearby Figueroa Street, was the site of a Chumash village. They had keen oceanic navigational skills made use of the abundant local resources from sea and land.: 36 The Ventura Chumash were in contact with the Channel Islands Chumash; both mainland and island Chumash utilized large plank-sewn seagoing canoes, called Tomol, with the island people bringing shell bead money, island chert, and sea otter pelts to trade for mainland products like acorns and deer meat.
In 1769, the Spanish Portolà expedition, first recorded European visitors to inland areas of California, came down the Santa Clara River Valley from the previous night’s encampment near today’s Saticoy and camped near the outlet of the Ventura River on August 14. Fray Juan Crespi, a Franciscan missionary traveling with the expedition, noted that “we saw a regular town, the most populous and best laid-out of all that we had seen on the journey up to the present time.” Archaeological records found that the Chumash village they encountered was settled sometime around 1000 A.D.
Junípero Serra, first leader of the Franciscans in California, founded Mission San Buenaventura in 1782 as his ninth and last mission established near the Chumash village as part of Spain’s colonization of Alta California. The mission was named for St. Bonaventure, a Thirteenth Century Franciscan saint and a Doctor of the Church.
San Miguel Chapel was the first outpost and center of operations while the first Mission San Buenaventura was being constructed. The first mission burned in 1801 and a replacement building of brick and stone was completed in 1809. The bell tower and facade of the new mission was destroyed by an 1812 earthquake. The Mission was rebuilt and functions as a parish church.
The Mexican secularization act of 1833 was passed twelve years after Mexico won independence from Spain in 1821. Mission land was sold or given away in large grants called ranchos. Rancho Ex-Mission San Buenaventura was a 48,823-acre (197.58 km) grant that included downtown Ventura. The Battle of San Buenaventura was fought in 1838 between competing armies from northern and southern California. Governor Juan Bautista Alvarado granted Rancho San Miguel to Felipe Lorenzana and Raymundo Olivas, whose Olivas Adobe on the banks of the Santa Clara River was the most magnificent hacienda south of Monterey. Fernando Tico also received a Mexican land grant for Ojai and a parcel near the river in downtown Ventura.
Following the American Conquest of California in the Mexican-American War, California became a U.S. territory in 1848 and a U.S. state in 1850. After the American Civil War, settlers came to the area, buying land from the Mexicans, or simply as squatters. Vast holdings were later acquired by Easterners, including railroad magnate Thomas A. Scott. He sent Thomas R. Bard to handle Scott’s property.
Ventura had a flourishing Chinese settlement in the early 1880s. The largest concentration of activity, known as China Alley, was just across Main Street from the Mission San Buenaventura.
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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 house. 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 Santa Clara 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!)
Kinds Of FHA Home Loans
In addition to its popular FHA loan, the FHA likewise guarantees other loan programs used by personal lending institutions. Here’s a take a look at each of them.
- FHA 203( k) loans – These FHA loans assist homebuyers purchase a home– and renovate it– all with a single home mortgage. Property owners can also use the program to refinance their existing mortgage and add the expense of renovating tasks into the brand-new loan. FHA 203( k) loans can be found in 2 types:
- The restricted 203( k) has an easier application procedure, and the repairs or enhancements should amount to $35,000 or less.
- The basic 203( k) requires extra documentation and applies to enhancements costing more than $5,000, but the total value of the residential or commercial property need to still fall within the FHA mortgage limit for the location.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home loan and is also insured by the FHA. A HECM enables older house owners (aged 62 and up) with significant equity or those who own their houses outright to withdraw a part of their house’s equity. The amount that will be available for withdrawal differs by debtor and depends upon the age of the youngest customer or eligible non-borrowing partner, present interest rates and the lower of the house’s appraised value or the HECM FHA home mortgage limitation or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy effective mortgages backed by the FHA enable homebuyers to acquire houses that are currently energy effective, such as EnergyStar-certified structures. Or they can be used to purchase and renovate older houses with energy-efficient, or “green,” updates and roll the costs of the upgrades into the loan without a bigger down payment.
- FHA Section 245( a) loan – Also called the Graduated Payment Mortgage, this program is geared at customers whose incomes will increase with time. You begin with smaller regular monthly payments that gradually go up. Five particular plans are readily available: three strategies that permit 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. Two other strategies 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 2023
For 2019, the flooring limit for FHA loans in most 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 earlier. These limitations are referred to as “ceilings” and “floorings” that FHA will guarantee. FHA updates restrict amounts each year in response to altering house 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 standard mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and flooring limitations vary according to the cost of living in a particular area, and can be various from one county to the next. Areas with a greater expense of living will have greater limitations, and vice versa. Unique exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where house building 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 challenge or are having a hard time to make their payments.
That relief might be in the form of a temporary period of forbearance, a loan adjustment that would lower the rate of interest, extend the payback 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 Ventura CA?
The FHA makes it relatively simple to qualify for a home loan. Again, the government guarantees the loan, so mortgage lenders are more willing to approve 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 Ventura CA, you might have better luck with shopping around for a better option.
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 Ventura 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 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 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 shows 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 mortgage from FHA-approved loan providers in Ventura rather than the FHA itself, which just insures the loans. FHA-approved lenders can have different rates and costs, even for the exact same loan.
FHA loans are available through many sources– from the most significant banks and credit unions to community banks and independent home loan loan providers. Costs, services and underwriting standards differ amongst loan providers or home loan brokers, so it’s crucial to look around.
Learn more about how to discover low FHA home loan lender.