FHA Home Loans
 

 
The FHA Programs allow for low down payment for home purchases, repair and rehabilitating run-down properties under the FHA, 203(k) & 203(b) Repair and Energy Efficiency Loans. You can link to other Government Programs from the menu below. You may want to check out our special 1% down program with a free 2% lender equity boost to the down payment, 4.294% APR, 30 year term and fixed rate, as well. Just click here.

 

 

FHA Has Low FICO Requirements!

The FHA Home Loan is a mortgage that is insured by the Federal Housing Administration, which is issued by a bank or mortgage lender. The FHA does not actually make the loan to the home borrower, they help reduce the lender's risk if the borrower would not walk away from the loan. If the borrower does go into foreclosure, then FHA will cover the first 22% of the loss. Mortgage insurance is required for loans above 80% LTV, which what the is traditionally required for a conventional down payment. This insurance reduces the actual risk for the lender, allowing lower borrowering requirements. Because, of this MI the FHA will allow as little as 3.5% down payment, the FICO score can be as low as 580, and the interest rate tends is also lower. This allows first time borrowers to buy a home with more lienent borrowering requirements than a conventional mortgage. If the borrower were to put 10% down, FHA allows FICO scores as low as 500. This not to say that borrowers with a higher FICO scores assets and income can not take advantage of these loans, they can and do! Those less well qualified borrowers should expect a higher the interest rate, with lower FICO scores than the more qualified borrowers. Please know, that FHA may allow a 500 FICO, however, not all lenders will permit that low of a score. Often the lenders have tighter "overlays" on their FHA guidelines. The CA Mortgage Lender has a FHA approved lender who will go down to a 500 FICO!
FHA Loan Limits Go Up For 2018

The limit for FHA Insured Home Equity Conversion Mortgages will increase on a national basis for 3,011 counties from $636,150 to $679,650 for high-cost counties, and from $276,000 to $295,000 for non-cost counties, and there will be 233 will not change!

Reverse Mortgages are not county based and those loan limits will rise from $636,000 to $680,000 nationally. According to National Mortgage News


 Which Renovation Loan Works Best For You, FHA or FNMA HomeStyle?

Click Here For A Chart!



FHA loans came into being during the 1930's in reaction to a strom of foreclosures and defaults that happen as a result of the Great Depression. The Federal Housing Administration wanted to spur the housing market by providing lenders with adequate insurance to allow lending at an affordable interest rate, and be accessible to people with less than outstanding credit. Basically, the Federal Government insures loans for their FHA approved lenders to reduce their risk if the mortgage payments are not made!

The borrower benefits from a FHA home loan in that the down payment is a very low 3.5%, from lower FICO and credit requirements substantially lower interest rates. Making this type of loan one of the easiest loans to qualify for. Also, FHA loans are assumable, if the lender allows assumptions. Where conventional loans do not allow a buyer of your home to assume your existing mortgage. This can be real advantage if you want to sell your home, and your buyer has low or bad credit ,or undergone a bankruptcy or had a foreclosure in their history. They may still qualify to assume your existing home mortgage.

FHA Streamline loans are for refinancing - of existing FHA mortgages and basically simiplies qualifying by waving documentation normally required by a lender for income and employment , bank account and credit score verification and an appraisal. As the name suggest s the whole process is "Streamlined". The FHA Streamline can not be used for a purchase loan, only to refinance. You can also qualify for a Limited 203K (but not a Standard 203k) to make necessary home repairs up to $35,000 with a Streamlined refinance.

There are draw backs and one is the required mortgage insurance, which is more expensive than those required for a non-FHA loans. FHA does not allow "lender paid" mortgage insurance, which typically carries a little higher interest rate, but the overal monthly payment can be less then the over all cost s of FHA insurance. Also, a borrower must live in the property, this type of loan is not intended for investors, owner occupied only. A borrower can not have two (2) FHA loans at a time, only one per family! It does not matter if the either a husband or wife is not a borrower on the original loan. The non-FHA (other) spouse, still can not get a second FHA home loan on another property. However, there ONLY two exceptions to no second FHA loan rule:

1. If the borrowers job is more than "a reasonalble" commute to his or her job. This is usually considered to be in excess of an hour each direction to or from the home and the place of employment.

2. If the borrowers family out grows the original FHA home, and you need to move to accomodate the larger family.

FHA Loan Limits: The loan limits vary by state and county and are set by Federal Housing Authority. In some counties you can get maximium financing up to $679,650 with a 3.5% down payment. Compared to conventional financing for loans bought by Fannie Mae or Freddie Mac the maxium is currently $680,000 for some high cost CA counties. (see high cost counties)

Mortgage Insurance: Upfront insurance premium (UFMIP) -- As the name impies, this is a one-time upfront premium that the borrower will pay 1.75% of the home loan, whether you have a FICO score of 500 or 800, plus you will also pay annual MIP monthly premium as well. The upfront premium can be amortized into your loan amount or you can bring cash to closing to cover the full amount of this insurance premium . Obviously bringing in cash saves up-to 30 years of interest on the MI.

What is the actuall cost you? Well let's say you want to buy a home with a loan amount of $375.000.00 (after the 3.5% down payment). Let's do the math: $375,000 loan x 1.75% = $6,562.50. So either $6,562.50 will be paid at closing in cash along with the other closing costs or that amount will be rolled into your loan amount. No exceptions!

Annual mortgage insurance premeium (charged monthly) -- The following chart reflects premeiums, which are based on term, loan amount, LTV ratio (Loan-to-Value Ratio) and the annunal insurance premium rate.

 


What our clients think:

 "Jaren has helped me with a home purchase loan and 2 refinances. I would certainly rely on him again should I need another home loan. He dedicated himself to finding the best loan for me, and went the extra mile to make it work. I know he will do the same for you!"

Christina H. Kelseyville, CA


 


 Trump's First Decision In Office Made The FHA Home Loans Less Affordable. Reversing, The Reduction In Monthly Mortgage Insurance Premimuns. Which Costs The Home Buyer Thousands Of Dollars In Monthly Added Costs To Their FHA Home Mortgage!

So Much For Helping The Little Guy!
 

 Annual Insurance Premium Chart Was Scheduled For Jan. 27, 2017 rate reduction. Rates were set to drop by 0.20% to 45% lower they are in red. Updated rate (Trump Rate) In Black!

 Loan Term  Loan Amount  LTV Ratio Annual Insuranace Premium
 Over 15 years  $625,500 or less  95% or less  0.80% (0.55% was)
 Over 15 years  $625,500 or less  Over 95%  1.00% (0.60% was)
 Over 15 years  Over $625,500  Over 95%  0.85% (0.55% was
 Over 15 years  Over $625,500  Over 95%  1.05% (0.60% was)
 15 years or less  $625,500 or less  90% or less  0.45% (0.25% was)
 15 years or less  $625,500 or less  Over 90%  0.70% (0.50% was)
 15 years or less  $525,500 or less  78% or less  0.45% (New)
 15 years or less  Over $625,500  79.01 to 90% or less  0.70% (0.25% was)
 15 years or less  Over $625,500  Over 90%  95% (0.75% was)

 

 Disclosure for TIRED Of RENTING flyer directly above:

The prncipal and interest on $315,250 30 year Fixed Rate Loan at 4.125% and 97% loan-to-value (LTV) $1,527.86 with 2% paid by lender at closing. The Annual Percentage Rate (APR) 4.294%. Interest rates change on a daily basis and expect a different rate. The principal and interest payment does not include taxes or insurance preimum will result in actual higher monthly payment will vary with each loan.

*Includes estimated taxes and insurance.
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Interested Click Here to go to e-mail for a quick reply!

Call Jaren: 510.215.1743


2018 High Cost CA Counties!

Conforming and FHA loan limits went up as Janurary 1, 2018 to $679,650.00 from $636,300.00 for High Cost Counties, also the floor as well as the ceiling has been raised by The Federal Housing Administration. The floor is $453,100 in non-high cost counties. See High Cost Counties Chart for the up dated max. loan amounts for the high cost counties. Click Here


See the line in green is for our above loan scenario: How to determine the monthy mortgage insurance premium payment for that same $375,000 loan amount: The term of 30 years, LTV is 96.5% (3.5% down), the annual insurance premium is 1.00% or $3.750.00 per year and is $312.50 vs. the previous $187.50 per month, or $125.50 more and that is $1,506 per year more clostly. or $45,180 over term of a 30 year mortgage. President Trump just picked your pocket!

Let's do the math: $375,000 x 1.00 = $3,750 per year, now divide by 12 months = $312.50 per month added to your mortgage payment every month. If your loan amount is less you will pay less. If the loan amount is larger you will obviously pay more per month. The costs will be higher or lower depending on the actual loan amount includes the upfront mortgage premium.

The point being is that if you have a great FICO and credit history it is possible you could do better with a conventional home loan. FHA can cost you more per month even though you might have lower interest rate compared to a conventional loan. If you roll the upfront MI into loan it will cost you in additional interest over the term of the loan. The rule of thumb is that for every $100 of debt or monthly cost you may qualify for $10,000 less in purchase price. So by that measure $187.50 extra insurance cost per month means our borrower spends more on the cost of the home for about the same monthly payment.

How long will the mortgage insurance last that depends on Term, the LTV and Duration. If it is new loan (after June 3, 2013) then the borrowers will pay mortgage insurance for the entire loan term, if the LTV is greater than 90% when the loan was originated. If the LTV was 90% or less the borrower will pay the MI for mortgage term or 11 years whichever happens first.

What is a FHA 203k and why would want one?

To see a comparison chart 203K, 203k limited, and FHMA HomeStyle -- Click Here

Let's say you found a home your really liiked, but it had issues, the roof, plumbing or the wiring is in terrible shape. To convert that fixer into a dream house could be out of reach, after you put all your cash into the down payment and closing costs. You realize you really can not affort to make the repairs, and you think no lender going to give you a mortgage on a house that has a major repair problems. Well don't be so sure. As long as you have at least some of the foundation standing you can get 203k FHA loan to restore the home to a new home move-in status. That's corrrect you only need some of foundation in-order to get 203k FHA Loan.

A FHA 203k can come in really handy if you found a potential dream home, but unfortunately it is a "Fixer-Upper" in need of major or even not so major repairs. That's when a FHA 203K home loan can come to the rescue! Yes, 203K can get those repairs made, the standard 203k is given for properties that need structural repairs, remodeling, landscaping, or even a new garage. The second type is the Limited 203k is made for engergy conservation, new roofs, appliances, or non-structural repairs like painting with maximun cost of $35,000 for repairs. These programs will not cover "luxury" improvements like a new swiming pool and will not fund any improvement that is not permanent part of the home. The minimun on the regular or Standard 203k is $5,000 and the maximun amount is either is the lesser of the nationwide loan limit. In California that max. loan limit ranges between $271,050 to $625,500 depending on the CA county for a one unit , where the property is located. For all of the CA County loan limits for 1 to 4 units go to: http://entp,hud.gove/idapp/html/hicost1.cfm. The approporiate LTV ratio from the Purchase LTV limits multiplied by the lesser of the following OR:

A. 110 percent of the after improved appraised value, and a condo maximum is 100%.

B. The Adjusted As-Is Value plus: Financeable Repair and Improved Cost, for a Standard 203k or Limited 203k. Financeable Contingency Reserves for Statndard 203k or Limited 203k, and Financeable Mortgage Payment Reserves, only for Standard 203k .

FHA 203b Loans - are for home purchase that have fairly minor required home repairs, which can not exceed $5.000.00. For major repairs a borrower would choose a 203k home loan program.

Energy Efficient FHA Loans - are designed to help potenial and current homeowners to reduce their monthly electrical and/or heating utility bills by adepting energy efficeient systems into their existing or new home. Is available as part of new FHA loan or by refinancing the existing FHA loan. The point is to make us as a nation more energy efficent.

Basically this program is open to moderate and low income families and by incorporating this program helps keep the family's monthly expense lower. Which should allow more families to qualify for their FHA loans by reducing their engergy bills. This program can serve borrowers that qualify under 203b and 203k programs and can finance 96.5% of their home value. In order to qualify for the energy efficent feature of this program the estimated energy saving must be pre-determined by a qualified consultant or a home energy rating syetem. The fee for the inspection can be amortized and rolled into the mortgage. Condos may qualify if they are an "appproved" FHA or the VA, and co-operative's do not qualify. The amount costs for the energy improvement can not exceed 5% of the property value not to exceed $8,000 or $4,000, whichever is larger. Make sure you let your loan officer know that you intend to request this program when discussing the FHA program, because the estimates of costs will need to be clearly stated in the application.

What homes qualify?

1. A 1 to 4 unit family homes that have been built for at least 1 year. 2. A home that has been torn down, provided that some of the exisiting foundation still remains in place. 3. A home can be moved to a new location; and 4. it cannot be a co-op, but some condos are eligible. The benefit of these loans is that it gives a borrower a chance to buy a home in need of repair that he or she could not otherwise be able to afford to purchase. The interest rate are often very good and the down payment is low.

Not all properties qualify and there is also limits put to the funding and you will need to hire an licensed contractor to do the work, usually can't do the work yourself, and you may also have to hire a HUD approved independent consultant, FHA/lenders require detailed proposal of the work to be done and acturate estimates, as well time limits on when work must start and end. Which can add to the cost of getting the work done. The usual FHA lending guidelines apply to both standard and 203k mortgages.

Can 203k used for improvement and repair of HUD Foreclosed Homes?

Yes! This program can apply to HUD Foreclosed single homes avaiable at auction from by HUD. HUD's REO properties that have a Management and Marketing contract (M&M) designation as "isurable" with repair escrow with $5,000 or less in required repairs or "unisurable" with between $5,000 and $35,000 in required repairs are eligible for the Streamlined (k) program as long as they qualify as eligible work items outlined in this Mortgagee Letter. To learn more about FHA loans and HUD REO properties go to: portal.hud.gov/hudportal/documents/huddoc?id=05-5ml.pdf

What is the down side to FHA?

FHA loans have a substantial upfront mortgage insurance cost, and the monthly mortgage insurance is often may cost more than non FHA lender's mortgage insurance. In reality FHA MI can last for the entire tem of the mortgage, at the the discretion of the lender. The approval process can be lenghtly 45 plus days. I have found many sellers prefer not to deal with FHA borrowers and will not accept FHA loan offers. If you are only getting FHA because you wish to take advantae of 203k program. Then you might want to look at the other renovvation loan program offered through conventional lenders called Fannie Mae Homestyle Renovation (See this loan's description in Conventional Products)

CalFHA

You can learn more about the CalFHA program at the link below or from the menu to upper left side of this page.

For Information concerning CalFHA and other programs offered under this loan option.

 

 To apply for any of these progams just click on the BLINK link below and you can be approved before you know it. It is fast safe, secure and password protected!

 

 

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 Copyright 2016 Jaren Dahlstrom, All Rights Reserved -- Jaren Dahlstrom, Loan Officer, CA BRE 01358563, NMLS 237999 -- United Lendinging Partners/United Realty Partners BRE #02012818, NMLS #1525816