FHA Loans in California

An FHA loan is a homebuyer’s mortgage issued by the Federal Housing Administration (FHA). Residents get FHA loans in California because of the many advantages over standard loans from banks and lenders. While FHA loan eligibility reviews many of the same qualifications as other mortgages, the standards are less stringent. As an FHA loan borrower, you will be responsible for paying for mortgage insurance. This is designed to protect the lender from a loss if you should default on the loan for any reason. Because FHA loans are offered with attractive interest rates and allow more flexible eligibility requirements than other types of homebuyer loans, this is a good option if you are a first-time buyer, you have a low household income or a less than perfect credit score. First-time buyers can benefits from California housing counseling services that provide comprehensive and personal advice when purchasing a home. To find out how to get an FHA loan in California, review the topics and information below.

Advantages of FHA Loans for California Homebuyers

The advantages of FHA loans are numerous, as the focus of the federal administration is to make home buying easier for low-income families. FHA loan eligibility is one of the key benefits over regular bank-issued mortgages. FHA loans are available to you even if you have a less-than-perfect credit. The higher your credit score, the lower your down payment percentage will be. If you have a low credit score, you may still be eligible for an FHA loan under certain circumstances.

A loan from the Federal Housing Administration also requires a down payment that is less than the stipulations of a standard mortgage. Likewise, you can also benefit from not having to pay closing costs upfront. FHA loans in California permit the borrower to pay a percentage of the loan to cover the closing costs. This is a big benefit for many homebuyers, particularly low-income families because it allows them to focus on saving money for the down payment without having to worry about any other upfront fees.

Low interest rates are another benefit. An FHA mortgage typically has lower interest rates than other types of homebuyer loans, which makes it advantageous for all buyers. FHA loans are also assumable, which means that when the time comes for the borrower to sell the home, the new buyer is permitted to take over the seller’s existing FHA mortgage instead of applying for a FHA loan at the current mortgage rate. This is particularly advantageous in a time when mortgage rates are fluctuating or rising.

To learn more about the specific details of FHA loan eligibility, download our comprehensive guide.

FHA Loan Eligibility in California

Eligibility for an FHA loan is very specific and pertains to both the borrower and the property. To get an FHA loan in California, you must be a U.S. citizen, permanent resident or have a qualified alien status. Your credit score and household income will influence the type of loan from the FHA for which you are eligible and the loan type may have additional requirements. By means of example, one FHA loan requires the borrower to complete homebuyer education counseling with a HUD-approved counseling agency, which is available online or in person. The counseling program usually lasts for eight hours and will provide you with information on the loan approval process, how to manage your credit and finances as well as how to maintain your home and finances after purchase. The aim of the counseling workshop is to effectively prepare you for home ownership. On completion of the counseling program, you will receive a HUD-approved housing education certificate.

As a California FHA loan borrower, you must occupy the home as your primary residence within 60 days of the final closing date. FHA loan lenders allow non-occupant cosigners on the mortgage agreement who do not occupy the residence, but they are not allowed to have a title on the property nor a vested interest. A non-occupant cosigner must sign all loan documents and must have their income, credit rating and assets assessed by the underwriters.

There are also property requirements for FHA loans. The market price of the home must not exceed the California FHA’s sales price limits. These limits will vary depending on the county where the residence is located. To be eligible for a loan from the FHA, the residence must be a single-family or one-unit home. It is the lender’s responsibility to make sure that the property meets these requirements.

Though a Federal Housing Administration loan may be permitted for manufactured homes, the home must meet the required guidelines for this type of property. There are also stipulations for accessory dwelling units, such as “granny units” or “in-law units.” These are eligible providing that they are zoned for single-family occupancy and they meet FHA guidelines as well as city and county ordinances. HUD homes are also available for FHA loans

The age of the home is also taken into account. FHA loans are only permitted for properties that are newer with the properties’ lot less than a predetermined acre size. To be considered, all properties must be complete in terms of construction and repairs, and ready to occupy. The property must meet the guidelines of both the FHA and California health and safety codes and lenders do not permit co-ops, leaseholds or land trusts.

To learn more about the FHA property requirements, download our comprehensive guide.

How to Apply for an FHA Loan in California

Knowing how to get an FHA loan is a valuable for residents who want to benefit from the advantages of a federally backed mortgage. When you want to apply for an FHA loan, you will need to talk to an FHA-approved lender. FHA loans in California are available for pre-approval, which means you can discover the amount before looking for possible purchases.

What Housing Help Can I Get Through HUD?

California residents can receive various types of housing assistance, from federal housing aid to home loans and more. Additionally, the Department of Housing and Urban Development offers CA residents counseling services, which cover how to avoid foreclosure, how to buy a home and how to rent a living space, to name only a few topics. Find out everything you need to know about housing assistance programs in California by downloading our comprehensive HUD guide.

Who Is Eligible to Receive Housing Help in California?

In order to receive housing help from the state of California, you typically need to meet the income requirements of the specific assistance program you are applying for. These necessary qualifications often refer to the income of the household, based on the number of members. Find out if you and your household are eligible for housing assistance here.