The Federal Housing Administration (FHA) was established as part of the National Housing Act of 1934 and later became part of the Department of Housing and Urban Development (HUD) in 1965. The goal of the FHA is to improve the housing market and protect lenders from borrower default. The FHA has become the largest insurer of mortgages in the world, having insured over 34 million mortgages since its establishment. At LoansOnTheWeb.com, we offer great rates and flexible financing options on FHA Loans throughout Campbell, San Jose, Los Gatos, Santa Clara, Cupertino, Saratoga, and Sunnyvale.
FHA loans are available not only for the purchase of a new home, but for financing special renovation projects and reverse mortgages as well. Current FHA loan holders can take advantage of refinancing options including both cash-out refinance and streamline refinance loans.
Relaxed credit requirements and low down payment options are two of the biggest advantages of the FHA loan program. Buyers have the potential to qualify with a down payment of only 3.5 percent of the purchase price and a credit score of 580. Down payments can even be gifted from family members if a borrower does not have the minimum required down payment on hand. FHA loans are quite popular among first time homebuyers in California given the ease of qualification.
FHA Loan Requirements
- Credit Score – Generally, the minimum credit score requirement is 580. It may be possible to qualify with a credit score between 500 – 579 if a higher down payment can be made.
- Income Requirements – A debt-to-income ratio of 43 percent or less is needed. In some cases, a debt-to-income ratio as high as 50 percent may be approved.
- Down Payment – The minimum down payment requirement is 3.5% of the purchase price. As mentioned above, borrowers who do not meet the minimum credit score requirements may be required to make a larger down payment.
- Property Requirements – All properties purchased with an FHA loan must meet certain safety, security, and soundness (structural integrity) requirements set forth by the FHA.
Two different mortgage insurance premiums (MIP) are required with all FHA loans. The first is an up-front insurance premium of 1.75 percent of the purchase price of the home. The FHA will add this premium to your loan balance. The second premium due is a monthly insurance premium. This monthly premium will be based on factors that include such things as loan amount, LTV ratio, and the length of the mortgage.
LoansOnTheWeb.com is committed to helping our clients throughout Campbell, San Jose, Los Gatos, Santa Clara, Cupertino, Saratoga, and Sunnyvale with all of their FHA loan needs. Whether you are purchasing your very first home, or looking to refinance an existing FHA loan, we can help. Contact us today with any questions you may have on FHA loans or to begin the pre-qualification process!