How To Qualify For FHA Loan in Whittier California (Los Angeles County)

How To Qualify For FHA Loan in Whittier California (Los Angeles County)

Looking for an FHA Loan in Whittier 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 more flexible 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 FICO score can be between 500 – 579 if a 10% down payment is made. It’s important 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 adequate insurance; and to help spark the housing market by making mortgages highly accessible and affordable for people with not so great credit or a low down payment due to FHA mortgage limits in Whittier, 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.


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

Typically an FHA loan in Whittier 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 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 circumstances.

Another advantage of an FHA home loan is that it’s an assumable mortgage 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 Los Angeles 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 home loan programs will permit 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 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 Whittier California

Whittier’s roots can be traced to Spanish soldier Manuel Nieto. The location of Nieto’s land grant was minimized in 1790 as the result of a disagreement with Mission San Gabriel. Nieto developed a rancho for his family near Whittier, and acquired cattle and equines for his cattle ranch as well as additionally planted cornfields.

At the time of the 1840s Mexican– American War, much of the land that would come to be Whittier was possessed by Pio Pico, a breeder as well as the last Mexican governor of Alta California. Pio Pico developed a farmhouse here on the San Gabriel River, understood today as Pio Pico State Historic Park. Following the Mexican– American War, German immigrant Jacob F. Gerkens paid $234 to the U.S. federal government to acquire 160 acres (0.6 km) of land under the Homestead Act and also built the cabin recognized today as the Jonathan Bailey House. Gerkens would later on become the initial chief of police of the Los Angeles Police Department. Gerkens’ land was had by several others before a group of Quakers acquired it and also increased it to 1,259 acres (5 km), with the intent of establishing a Quaker area. The location soon ended up being referred to as a flourishing citrus ranching region, with “Quaker Brand” fruit being shipped all over the United States. Beginning in 1887, walnut trees were planted, and also Whittier came to be the largest walnut grower in the United States. In enhancement to walnuts as well as citrus, Whittier was also a major manufacturer of pampas grass.

In 1904, the Pacific Electric opened the trolley line known as “Big Red Cars” from Los Angeles to Whittier. After World War II, Whittier grew rapidly and the sub-dividing of orange groves started, driven by housing lacks in southern California. The city proceeded to grow as the City linked portions of Whittier Boulevard and East Whittier.

The meeting soon outgrew this 100-seat meeting house and also a brand-new bigger building was put up on the corner of Philadelphia Street and Washington Avenue in 1902. The Quakers also started Whittier Academy (later on Whittier College), and additional conferences satisfied in East Whittier as well as at Whittier College’s Mendenhall. Both the Mendenhall conference and the East Whittier conference maintained the silent conference longer than the major church.

Development on developing an university was occasional, however on July 30, 1896, the Whittier Academy, operating since 1891, formally transformed its name to Whittier College with 100 students registered. By 1906, Whittier College was an instructional establishment with labs, boarding halls, a large gym and sports fields.

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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 Los Angeles 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.


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Kinds Of FHA Mortgage Loans

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

  • FHA 203( k) loans – These FHA loans assist property buyers acquire a house– and refurbish it– all with a single home mortgage. House owners can also use the program to refinance their current home mortgage and include the expense of redesigning tasks into the brand-new loan. FHA 203( k) loans can be found in 2 types:
    • The minimal 203( k) has a much easier application procedure, and the repair work or improvements should amount to $35,000 or less.
    • The standard 203( k) requires extra documents and applies to improvements costing more than $5,000, however the total value of the property must still fall within the FHA mortgage limitation for the location.
  • Home Equity Conversion Mortgage, or HECM – A HECM is a popular kind of reverse mortgage 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 homes outright to withdraw a part of their house’s equity. The quantity that will be readily available for withdrawal varies by debtor and depends on the age of the youngest borrower or eligible non-borrowing partner, current rates of interest and the lower of the house’s assessed value or the HECM FHA mortgage limit or sales price.
  • FHA Energy Efficient Mortgage (EEM) program – Energy efficient home loans backed by the FHA permit property buyers to buy homes that are already energy efficient, such as EnergyStar-certified buildings. Or they can be utilized to purchase and remodel older houses 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 called the Graduated Payment Mortgage, this program is tailored at borrowers whose earnings will increase in time. You begin with smaller regular monthly payments that slowly go up. Five particular plans are available: 3 strategies that allow 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent annually. 2 other strategies 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 the majority of the country is $314,827, up from $294,515 in 2018. For high-cost locations, the ceiling is $726,525, up from $679,650 a year back. These limitations are referred to as “ceilings” and “floorings” that FHA will insure. FHA updates limit amounts each year in response to changing house rates.

FHA is required by law to change its quantities based upon the loan limitations set by the Federal Housing Finance Agency, or FHFA, for standard mortgages ensured 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 higher expense of living will have higher limits, and vice versa. Unique exceptions are made for real estate in Alaska, Hawaii, Guam and the Virgin Islands, where house construction is more costly.

FHA Loan Relief

Loan servicers can use some versatility on FHA loan requirements to those who have actually suffered a serious monetary hardship or are having a hard time to make their payments.

That relief might be in the form of a momentary duration of forbearance, a loan modification that would lower the rates 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 Whittier CA?

The FHA makes it relatively simple to qualify for a mortgage. Again, the government guarantees the loan, so mortgage lenders are more willing to approve mortgage loans. However, mortgage lenders can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender near Whittier CA, you might have better luck with 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 Whittier 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 applicants. 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 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 loans from FHA-approved loan providers in Whittier rather than the FHA itself, which only insures the loans. FHA-approved loan providers can have various rates and expenses, even for the same loan.

FHA loans are available through numerous sources– from the greatest banks and cooperative credit union to neighborhood banks and independent home mortgage lending institutions. Expenses, services and underwriting standards vary among lenders or home mortgage brokers, so it’s crucial to search.

Find out more about how to discover low FHA home loan lending institution.


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