How To Qualify For FHA Loan in Woodlands California (San Luis Obispo County)
Looking for an FHA Loan in Woodlands California?
An FHA loan is a home loan that’s 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 significant to remember though, that the lower the credit score, 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 adequate insurance; and to help grow the housing market by making mortgages much more accessible and attainable for consumers with less than stellar credit or a low down payment due to FHA mortgage limits in Woodlands, 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 home loan payments.
Because of that insurance, mortgage lenders can, and do, offer FHA home loans 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.
(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 Woodlands 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 approved for private mortgage insurance should look into whether an FHA loan is the popular option for their personal circumstances.
Another advantage of an FHA mortgage loan is that it’s an assumable mortgage which means if you want to sell your property, 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 San Luis Obispo 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 make it possible for 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 procedure.
The FHA Hybrid provides for an initial fixed interest rate for a period of three or five years, and then readjusts 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 minimal even on a worst case rate change.
About Woodlands California
Woodlands is a census-designated location in San Luis Obispo County, California. “The Woodlands” is a 956-acre master planned community with single- as well as multi-family houses, a resort hotel, retail and workplace, situated beside Nipomo, California. Woodlands sits at an altitude of 282 feet (86 m). The 2010 United States demographics reported Woodlands’s populace was 576.
According to the United States Census Bureau, the CDP covers an area of 1.7 square miles (4.3 kilometres), all of it land.
The racial makeup of Woodlands was 541 (93.9%) White, 7 (1.2%) African American, 0 (0.0%) Native American, 18 (3.1%) Asian, 1 (0.2%) Pacific Islander, 3 (0.5%) from various other races, and also 6 (1.0%) from 2 or even more races. Hispanic or Latino of any type of race were 27 individuals (4.7%).
The Census reported that 576 people (100% of the populace) resided in homes, 0 (0%) stayed in non-institutionalized team quarters, as well as 0 (0%) were institutionalized.
There were 271 houses, out of which 31 (11.4%) had youngsters under the age of 18 living in them, 212 (78.2%) were opposite-sex married pairs living with each other, 5 (1.8%) had a women householder with no hubby present, 0 (0%) had a male owner with no spouse present. 39 homes (14.4%) were made up of people, and 12 (4.4%) had someone living alone who was 65 years of age or older.
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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 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 San Luis Obispo 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 Mortgage Loans
In addition to its popular FHA loan, the FHA likewise insures other loan programs provided by personal lending institutions. Here’s a look at each of them.
- FHA 203( k) loans – These FHA loans assist property buyers buy a house– and renovate it– all with a single home loan. Property owners can likewise utilize the program to refinance their existing mortgage and include the cost of redesigning jobs into the brand-new loan. FHA 203( k) loans been available in two types:
- The restricted 203( k) has an easier application procedure, and the repairs or improvements should total $35,000 or less.
- The basic 203( k) needs extra documents and applies to enhancements costing more than $5,000, but the overall value of the property should still fall within the FHA home mortgage limitation for the area.
- Home Equity Conversion Mortgage, or HECM – A HECM is a popular type of reverse home mortgage and is also guaranteed by the FHA. A HECM permits older house owners (aged 62 and up) with considerable equity or those who own their houses outright to withdraw a portion of their home’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 spouse, current interest rates and the lower of the home’s assessed worth or the HECM FHA home mortgage limitation or sales price.
- FHA Energy Efficient Mortgage (EEM) program – Energy efficient 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 used to purchase and renovate older homes with energy-efficient, or “green,” updates and roll the expenses of the upgrades into the loan without a larger down payment.
- FHA Section 245( a) loan – Also known as the Graduated Payment Mortgage, this program is tailored at customers whose incomes will increase gradually. You begin with smaller sized monthly payments that gradually increase. Five specific strategies are available: three strategies that enable 5 years of increasing payments at 2.5 percent, 5 percent and 7.5 percent yearly. Two other plans set payment increases over 10 years at 2 percent and 3 percent each year.
(Or call 213-474-7389 to ask a local lender anything!)
FHA Loan Limits for 2023
For 2019, the flooring limitation for FHA loans in the majority 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 referred to as “ceilings” and “floorings” that FHA will insure. FHA updates limit amounts each year in response to changing home costs.
FHA is needed by law to adjust its amounts based on the loan limitations set by the Federal Housing Finance Agency, or FHFA, for traditional mortgages guaranteed or owned by Fannie Mae and Freddie Mac. Ceiling and floor limitations differ according to the cost of living in a particular location, and can be various from one county to the next. Areas with a higher cost of living will have higher limits, and vice versa. Special exceptions are produced housing in Alaska, Hawaii, Guam and the Virgin Islands, where home building is more pricey.
FHA Loan Relief
Loan servicers can offer some flexibility on FHA loan requirements to those who have actually suffered a severe monetary hardship or are having a hard time to make their payments.
That relief might be in the form of a short-lived duration of forbearance, a loan adjustment that would decrease the rate of interest, extend the payback duration, 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 Woodlands 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 mortgages. 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 Woodlands CA, you might have better luck with looking around for 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 Woodlands to find out for sure.
Income limits: there are none. You’ll need enough to show that you can repay the home loan 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
Borrowers get their home loans from FHA-approved loan providers in Woodlands instead of the FHA itself, which just insures the loans. FHA-approved lenders can have various rates and expenses, even for the same loan.
FHA loans are available through numerous sources– from the most significant banks and credit unions to neighborhood banks and independent home mortgage loan providers. Costs, services and underwriting standards differ amongst loan providers or home loan brokers, so it’s important to shop around.
Learn more about how to find low FHA home loan loan provider.