FHA Loans

The Federal Housing Administration (FHA) was created in 1934 and is tasked with protecting lenders and improving the housing market. The FHA insures homes loans made by approved lenders which allows both lenders and buyers to benefit from FHA loan programs. Lenders are protected from buyer default while homebuyers are able to qualify with great rates and less than perfect credit. FHA loans are available for purchases, refinances, special renovation projects, and even reverse mortgages. Vault Mortgage Lending offers some of the lowest rates available on FHA loans throughout Madera, Firebaugh, Los Banos, Merced, Chowchilla, Fresno and the surrounding California areas.

FHA loans are one of the most popular home loans among first-time homebuyers given the ease of qualification. 3.5% of the purchase price is the required minimum down payment for an FHA loan. A borrower could potentially qualify with a credit score as low as 580 if they are able to meet the down payment requirements. Family members can even offer the down payment as a gift if the borrower does not have the cash on hand.

FHA Loan Requirements

  • Credit Score – A score of 580 or higher is generally needed. Borrowers with scores between 500 and 579 may still be able to qualify with a larger down payment.
  • Debt-to-Income Requirements – 43% or less is the standard debt-to-income (DTI) ratio requirement. A DTI ratio of up to 50% may be approved in certain circumstances.
  • Down Payment – The minimum down payment required is 3.5% of the purchase price. A higher down payment may be needed depending on a borrower’s credit score.
  • Property Requirements – Properties must meet certain safety, security, and soundness (structural integrity) requirements to be eligible for the program.

Maximum loan amounts can range from $271,000 up to $636,500 in high-cost areas.

Mortgage insurance is what makes the FHA loan program and its various benefits possible. Two different mortgage insurance premiums (MIP) are required with every FHA loan. The FHA adds an up-front premium of 1.75% of the purchase to the balance of your loan. A second premium is paid each month as part of your mortgage payment which will fall between .45% and 1.05% of your annual mortgage balance. The rate is based on various factors such as your total loan amount, your loan-to-value (LTV) ratio, and the length of the mortgage.

Refinancing options are available for those who currently have an FHA loan. California homeowners can take advantage of both streamline refinance and cash-out refinance options. The FHA also offers the FHA 203k for renovation projects. This unique loan allows a borrower to combine the purchase of a home as well as the cost of renovations and repairs into a single mortgage.

Whether you are purchasing your first home in California, or are a current homeowner interested in refinancing your current FHA loan, at Vault Mortgage Lending, we are here to help with all your FHA loan needs. Contact us today for more information on FHA loans throughout Madera, Firebaugh, Los Banos, Merced, Chowchilla, and Fresno!