The Federal Housing Administration (FHA) aims to improve the housing market and protect lenders from losses resulting from borrower default. This is made possible by insuring home loans made by FHA approved lenders. Since its establishment in 1934, over 34 million mortgages have been insured by the FHA. Currently there are roughly 4.8 million home loans insured by the FHA in the US. Peoples Home Equity offers some of the best rates and financing options available on a variety of San Diego FHA loans.
San Diego FHA Loan Options
San Diego borrowers can take advantage of FHA loans for a number of different needs including purchases, refinances, reverse mortgages, and even special renovation projects through the FHA 203k program. FHA loans are very popular amongst first time homebuyers in San Diego due to the fact that they are one of the easiest mortgages to qualify for. For homeowners who currently have an FHA loan, cash out refinance and streamline refinance options are available to reduce interest rates or to obtain cash. Seniors can even take advantage of the FHA through the only federally insured reverse mortgage product, the Home Equity Conversion Mortgage (HECM).
The increasing popularity of FHA loans can be attributed to the exceptionally low down payment options and relaxed credit requirements. In many cases, borrowers can qualify with a credit score of 600 and a down payment as low as 3.5%. If a buyer does not have the cash on hand to meet the down payment requirements, family members are even able to gift this money.
San Diego FHA Loan Requirements
- Credit Score – 580 is generally the minimum credit score required to be eligible for an FHA loan. You may still be able to qualify with a larger down payment if your credit score is lower.
- Income Requirements – A debt-to-income ratio of 43 percent or less is standard. In special circumstances a debt-to-income ratio of up to 50% percent could be approved.
- Down Payment – 3.5 percent of the purchase price is the minimum required down payment.
- Property Requirements – The property being purchased must meet certain safety, security, and soundness (structural integrity) requirements determined by the FHA.
FHA Loans require two mortgage insurance premiums (MIP). One premium is paid up front while the other is a premium due each month.
- The up-front premium requirement is 1.75% of the purchase price. Buyers have the option of paying this at closing or rolling it into their mortgage.
- The monthly insurance premium will be based on a combination of factors including loan-to-value (LTV) ratio, loan amount, and length of the loan. This premium will be between .80% and 1.05%.
The maximum loan amount available for an FHA loan is limited by county.
San Diego FHA Loan Limits
Whether you are looking to take advantage of an FHA loan to purchase your first home in San Diego, or would like to refinance an existing FHA loan at a better rate, Peoples Home Equity can assist you with all of your San Diego FHA loan needs. If there are any questions we can answer for you regarding FHA loans, or if you are ready to begin the pre-qualification process, contact us today!