The Benefits of Choosing a Sacramento Federal Housing Administration Loan
There are many reasons an individual or family may struggle to quality for a home loan. Many people have poor credit scores from unfortunate situations that don’t adequately reflect their current financial situations or habits. If you find yourself in the tight spot between wanting to buy a home and not having the financial history to back you up, thankfully there’s a federal program in place for which you very likely qualify.
Federal Housing Administration Loans–more commonly referred to as FHA Loans–are a tool many first time home buyers utilize to secure their dream home. These loans are easy to apply for and are extremely attractive to many families with complicated finances because the qualifications are relatively low. That means that even without rock star credit history, you can still qualify for a mortgage loan. If borrowers simply have a steady income, and are not currently experiencing a foreclosure or going through bankruptcy, there’s a high chance of qualification for an FHA Loan. At Fairway Independent Mortgage Company, we can assess your situation and help you determine if you qualify for an FHA Loan.
How an FHA Loan Can Help You
To put in plainly, FHA Loans get you into the home you want more quickly and with less hassle. While the qualifications are not rigid or strenuous, it’s important to understand them fully to grasp how useful an FHA Loan program can be in your home-buying journey. Here are some factors to digest that make an FHA Loan worthwhile. You can also check out the FHA Loan Requirements.
FHA Loans require only a 3.5% down payment from the borrower. The down payment may come as a gift from a family member or other approved source, removing some of the challenges of collecting a large chunk of money. With the lowest down payment minimum of any mortgage program, this is really a no brainer.
Lender Opinion Influence
As with many loans, the FHA has systems set in place to make sure borrowers don’t fall in over their heads. By insuring that the front-end ratio (mortgage payment plus all other associated fees) and the back-end ratio (mortgage payment plus all other monthly debts) are under a certain percentage of gross income, borrowers are prohibited from falling further into payments they cannot manage. While this guideline protects borrowers, there are circumstances where the lender can present a case as to why an individual’s situation requires less strict rules. The process centers around each specific situation and no two borrowers are treated the same.
Low Credit Score
As mentioned previously, borrowers do not need excellent credit to apply or qualify for an FHA Loan. The standard expectation is a score of 580, but–as these loans do differ based on individual situations as well as county standards–it is possible to qualify with a score as low as 500. In these cases, the down payment will be higher–around 10%– to ensure the borrower is trustworthy and has sufficient funds. Where no other mortgage may be possible due to a low credit score, an FHA loan could still be in the cards.
With qualification standards that work for the borrower, FHA loans are an excellent option for families and individuals who need a little extra support while they get back on their feet. At Fairway Independent Mortgage Company, we can assess whether you qualify for an FHA Loan and guide you through the steps for applying for one. Contact us today to get the assistance you need to afford the perfect home. We’ll help you take a step in the right direction.
FHA Loans Sacramento
FHA loans are some of the most flexible and easiest guidelines to qualify for. So it's without surprise we recommend these loans for many of our clients.
Minimum Down Payment: 3.50% which can come as a “gift” from approved sources
Up Front MI of: 1.75%, can be added to Loan
Monthly MI of: .85%
Maximum Loan Amount SFR: Loan amounts are set by counties. In many northern California counties, the limit is $474,950. Loan amounts above $417,000 have additional costs and or rate increases. In the San Francisco Bay Area, FHA loan limits are as high as $625,500.
Maximum Seller Concession: 6%
Minimum FHA FICO requirement without additional down payment requirements is 600…but most companies require at least 620.
Refinancing is allowed, at high loan to value ratios
Both Fixed-Rate and Adjustable-Rate loans permitted
Roof & Pest inspections not mandatory unless noted by appraiser or called for in contract
No Income Limits
Do not have to be a first-time buyer
Must be owner occupied
No requirement for reserves when purchasing a single family dwelling.
Non-Occupying co-borrowers allowed
Can utilize other state, county and city programs, and Energy Efficient Mortgage options
FHA requires 90 days from date of trustee sale before purchase contract can be written unless REO is a federally chartered bank
FHA Loans are Assumable
Greg Sandler - The Mortgage Banker With The Experience You Can Depend On