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The Lowdown on FHA Loans...

FHA Loan

Do you have the home loan blues? You have looked around, trying to find a loan that you qualify for, and nothing seems like the right fit.

You can change your luck with an FHA loan.

The Federal Housing Administration (FHA) backs FHA loans. They were created to stymie foreclosures while stimulating the housing market. Because of that, these loans are a great option for people in California who wouldn’t normally qualify for home loans.

You don’t need great credit or a lot of money to put down for a home loan. In fact, you might even be able to get one of these loans if you have recently filed for bankruptcy.

Not sure if you qualify for an FHA loan?

Credit Scores and FHA Loans – What You Need to Know

You might get a little nervous when you hear lenders talk about credit scores. Maybe you’ve messed up in the past, or you haven’t had time to build your credit.

Whatever the case may be, your pulse races as soon as you hear the words “credit check.”

You don’t have to be nervous when you apply for an FHA loan. The Federal Housing Administration backs loans for people with credit scores as low as 500. That makes these mortgages a great choice for people who have less-than-perfect credit.

Of course, the better your credit score is, the better your terms are. Pull your credit report to make sure there aren’t any errors before you apply for a loan. If there are, get the errors off your report before applying for your FHA loan.

That is a great way to ensure you get the best rate.

You can make it even better by using a co-applicant. The FHA lets you use a parent or family member as a co-applicant. Then, you can benefit from his or her great credit scores. You will get the benefit of excellent credit without putting in all of the work.


Your Down Payment

Down payments can also be stressful. You might not have a lot of money saved, so how are you going to make your down payment?

You don’t need to win the lottery to make a down payment for an FHA loan. While you do have to put money down, it is considerably less than the 20 percent required with many other home loans.

If your credit score is 580 or higher, you only have to put 3.5 percent down. If your credit score is less than 580, you need to put 10 percent down. That’s not bad at all when you’re getting a mortgage loan.

Mortgage Insurance and FHA Loans

If you get a standard loan, you don’t need mortgage insurance if you put at least 20 percent down. However, you will need to get mortgage insurance if you go with an FHA loan, regardless of the amount of money you put down.

The FHA guidelines require that you get two types of mortgage insurance.

First, you need to pay the upfront mortgage insurance premium. This comes to 1.75 percent of the home loan and can be paid during the closing or included in the mortgage.

Next, you need to pay your annual mortgage insurance premium. Your lender will base the amount on the size and length of the loan, as well as the loan-to-value ratio. You will pay this premium on a yearly basis.


Loan Limits – How Much Can You Receive?

The Federal Housing Administration puts a limit on how much money it will back. The loan limits aren’t the same across the board, though. California residents get more money than people in other states do. If you live in California, the FHA will back loans of up to $580,750 for single-family homes. That makes it easy to find a home in the competitive California real estate market.

Properties Eligible for FHA Loans

Under the FHA loan guidelines, not all properties are eligible for financing. You can get a loan for a single-family home, a family home with up to four units, a condominium, or a manufactured home. If you finance a manufactured home, it must be on a permanent foundation.

Affordable Fixer Uppers with FHA Loans

If you find the perfect home in California, but it needs a little bit of work, an FHA loan can help. If you want to get some work done, you’ll need to obtain an FHA 203(k) loan. The FHA 203(k) home loan comes in two different forms.

Streamline FHA 203(k) home loans are a good option for basic home repairs. You can finance up to $35,000 for repairs. It’s important to note that there are certain guidelines regarding what repairs are eligible. You can speak with a member of the POP Mortgage team to find out if your repairs are covered.

Standard FHA 203(k) home loans are meant for more extensive home repairs. You can finance a minimum of $5,000 in repairs, and there isn’t a maximum. The necessary repairs must be supported by the appraisal.

Use our FHA loan calculator to add your home improvement loan, if necessary. This will give you a good idea of how much you can afford. Then, if you’re ready to get your loan, get the ball rolling by taking our FHA Loan Qualifier.


Selling Your Home with an FHA Loan

If you choose to sell your home after you get an FHA loan, it is important to understand that the loan is assumable. That means that the buyer can assume your loan. This is perfect if you find a buyer who has poor credit. That buyer might think that obtaining a loan is impossible, but it is easy with this assumable loan.

Benefits of an FHA Loan
• Easy credit requirements
• Low down payment
• Competitive interest rates
• Mortgage is assumable.
• You can have a co-applicant.

• Mortgage insurance is required.
• House has to meet FHA loan guidelines and standards.

Why an FHA Loan?

Typically an FHA loan 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. An FHA down payment of 3.5% is required. Borrowers who cannot afford a traditional down payment of 20% or can’t get approved for private mortgage insurance should look into FHA loans.

  • Fixed Rates
  • Adjustable Rates (ARM)
  • 3.5% Down Payments
  • Jumbo & Super Jumbo Loans
  • Terms from 5 to 30 Years

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