In order to refine the housing system back during the Depression in 1930s, the Federal Housing Administration (FHA) loan was initiated to help low-income households purchase homes. This program is still in practice, backing loans to benefit both the borrower and the lender.
The California FHA loan eases the purchase process for first-time homebuyers in the state. It encompasses considerably low down payment and flexibility for less-than-perfect credit scores.
e-Finance Mortgage LLC offers competitive rates in FHA loan throughout California. Our FHA loan services include various loan options for various purposes, such as financing for new homebuyer, re-financing for existing homeowners, special finances for renovations, and reverse mortgages.
California FHA Loan Requirements
- Credit Score – A credit score of 580 is the minimum limit to qualify for FHA loan application, as well as to fulfill minimum down payment eligibility
- The minimum down payment available is 3.5% of purchase price, provided that the borrower’s credit score is not less than 580. Those with a credit score between 500 and 579 may be able to qualify, but up to 10% down payment may be required.
- Debt-to-Income (DTI) Specification – A DTI ratio of 43% or less is required for qualification. In certain circumstances, up to 50% of DTI ratio may be approved.
- Property Standards – The property in question must satisfy structural safety regulations before loan approval.
FHA loan limits in California vary depending on the county. For instance, the state’s high-cost area property loan ranges from $271,000 up to $636,500.
Loan borrowers in CA must pay two mortgage insurance premiums (MIP):
- First premium – 1.75% of the purchase price as the up-front premium. This amount is automatically added to your total mortgage amount.
- Second premium – monthly premiums that serve as parts of total mortgage. These premiums are determined by the amount of loan, loan-to-value (LTV) ration, and mortgage length. They range between 0.45% and 1.05% of yearly mortgage balance.
California FHA Loan Benefits
FHA guarantees these home loans, and by doing so, increases qualified applicant’s borrowing powers, while protecting lenders from borrower default.
New homebuyers in California can acquire ideal house rates by applying for the FHA loan. Low down payments and credit score requirements reduce typical hindrances of purchase process.
e-Finance Mortgage LLC provides FHA loan service for financing homebuyers throughout California, as well as other special loans.
We offer the cash-out refinance loan and streamline refinancing services for current homeowners. Additionally, we also offer the 203k loan for homebuyers who want to opt for renovations in new residential property. 203k loan option allows them to merge both purchase and renovation costs into a single mortgage.
If you want to learn more about the FHA loan options in California, or simply start off your application process, contact e-Finance Mortgage LLC today!