FHA Loans in San Clemente
FHA Loan Services
We get it — the idea of buying a house and committing to a mortgage for the next 15 to 30 years sounds daunting.
But here’s the thing: not all mortgages are created equal. There are loans that are more affordable (and less overwhelming) than others. One such loan is the FHA loan.
If you’ve been shopping around for a home loan for quite some time, you’ve probably come across this option at one point. It’s a great and inexpensive solution for those with low to moderate-income.
Want to know more FHA loans and the different mortgage programs that fall under it? We’ve broken down all of the details on this page.
What are FHA Loans
Federal Housing Administration (FHA) loans are a type of housing loan that is backed by the FHA. It is offered by approved lenders throughout the country.
Designed specifically for those who fall under the moderate to low-income bracket, this might just be your key to buying your first home. It makes homeownership more affordable by offering lenient credit score requirements and lower downpayment.
Sounds just like what you need for acquiring your primary residence? Let’s dive deeper into how the FHA loan came to be.
Introduced in 1934, the FHA loan was created to empower Americans during the Great Depression. With the country plunged into economic turmoil, it was introduced to aid citizens in purchasing their primary property through attractive interest rates and more affordable downpayment requirements.
Currently, there are about 5 types of FHA loans that you can choose from: traditional mortgage, home equity conversion mortgage, 203(k) mortgage program, energy efficient mortgage program, and section 245(a) loan.
Types of Southern California FHA Loans
There’s probably a type of FHA loan program for every type of borrower. The following types are typically offered by private lenders:
Home Equity Conversion Mortgage (HECM)
The a popular reverse mortgage program that you have probably heard of before. It allows homeowners that are 62 years and older to convert a portion of their equity into cash without having to give up the title of their home.
FHA 203(k) Improvement Loan
If you want to make repairs and purchases for home improvement, this is the FHA loan for you. It allows you to borrow money specifically for the purpose of renovating and repairing your property.
FHA Energy Efficient Mortgage
Much like the previous type of FHA loan, this program is for those who want to improve their homes. However, the repairs should be more focused on lowering utility bills and making your home more energy-efficient.
Section 245(a) Loan
This is for those who anticipate a rise in their income in the foreseeable future. It starts out with offering smaller monthly installments, gradually increasing over time.
Qualifying for FHA Loans Orange County
The qualifications for an FHA loan are not much different than a traditional mortgage application. One stark difference, however, is that it does not place as much importance on your credit report. In fact, it places more scrutiny on your work history, for example.
- Less than 50% of your monthly income allocated to debts
One of the great things about FHA loans is that it still allows you to be qualified despite a history of bankruptcy and foreclosure. However, it does require you to show DTI of less than 50. This means that out of your total monthly income, half of that should not be allocated towards paying off debts.
While significantly lower than other loan programs, you will still need to put out a certain amount for the downpayment of your home.
- Credit score
Here’s the thing: despite a low credit score, you still have a chance of being approved for an FHA loan. The only weight that this carries is that your credit score will determine how much you will need for your downpayment.
- Approval of property by the FHA
The FHA has set a list of minimum requirements for properties that it will cover. Through this appraisal, they will determine if the home is worthy of a good investment or not.
- Mortgage insurance
Another upfront fee that you will need to pay is mortgage insurance payment.
Overall, the FHA loan is a great option for those who have a history of bankruptcy and foreclosure under their name. All you will need is your downpayment, a steady employment history, along with the series of requirements in this list. Of course, a trusted lender is also needed. By trusted, this generally means that the lending company you choose should be FHA-approved. Golden Coast Loans is one such provider.
Applying for FHA Loan through Golden Coast Loans
You can apply online easily for your FHA loan through Golden Coast Loans. If you still have further questions, one of our consultants will be happy to walk you through the qualification process.