How To Get An FHA First Time Homebuyer Loan – Savvy Homebuyer (2024)

FAQs

How To Get An FHA First Time Homebuyer Loan – Savvy Homebuyer? ›

California first-time homebuyer loan programs

The first step in applying for a FHA loan is to find a participating lender. Fortunately, most banks, mortgage companies, credit unions, and online lenders are equipped to provide FHA financing.

Key takeaways. FHA loans require a minimum 3.5 percent down payment for borrowers with a credit score of 580 or more. Borrowers with a credit score of 500 to 579 need to put 10 percent down to get an FHA loan. Conventional conforming mortgages only require 3 percent down, and VA and USDA loans require no down payment.

The loan is available for first-time home buyers who have a household income of no more than 80% of the median income in their area. For example, if you live in Los Angeles County your household income must be $78,320 or less.

Contrary to popular belief, you don't need a 20% down payment to buy a home with a conventional loan — the requirement is 3% down for most lenders. However, if you bring less than 20% to the table during closing, you'll need to pay for private mortgage insurance (PMI) on top of your loan, interest, and insurance.

Credit score requirements are low compared to most other. Your lender can accept a low down. Qualifying for an FHA loan can still be possible even if you have a bankruptcy or other financial issues in your financial history.

Usually, the FHA loan process takes anywhere between 30 – 60 days. However, appraisal problems can prolong this timeline. The FHA allows up to 120 days for necessary repairs to be made.

You'll likely need to make about $75,000 a year to buy a $300K house. This is an estimate, but, as a rule of thumb, with a 3 percent down payment on a conventional 30-year mortgage at 7 percent, your monthly mortgage payment will be around $2,250.

FHA loans require borrowers to pay mortgage insurance premiums (MIPs) at closing and throughout the life of the loan. Specifically, you'll pay 1.75% of the loan amount at closing as your upfront MIP. Then, you'll pay MIPs of 0.15% to 0.75% of the loan amount every year.

Term Length And A $200K Mortgage

Let's look at an example of how your loan term affects your mortgage payment. At a 7% interest rate, a 30-year fixed $200K mortgage has a monthly payment amount of $1,331, while a 15-year fixed $200K mortgage at the same interest rate has a monthly payment amount of $1,798.

How does California first-time home buyer program work? ›

CalHFA offers first-time homebuyers access to fixed-rate conventional and government-backed loan programs, with the option to roll in down payment and closing cost assistance. The requirements to be eligible include: A minimum credit score of 660 and up to 680, depending on loan type.

Zillow says seven metropolitan areas in the U.S., including four in California, require homebuyers to have an annual income of $200,000 or more to comfortably afford a home. Here's where and the annual income needed to comfortably afford a home: San Jose - $454,296. San Francisco - $339,864.

Here are some general FHA loan requirements for California. A credit score of 580 or higher: A lender may accept credit scores of 500-579 under certain conditions. A credit score lower than 580 will require a larger down payment. Minimum of two years employment: Must have verifiable, steady, and consistent income.

Happy homebuyers. Getty Images. Some first-time homebuyers in California are about to get some much needed help from the state. This year's version of a state-funded program called Dream for All is offering up to $150,000 per buyer to help with expenses associated with buying a home.

CalHFA is a program which provides FHA loans for families in California. It not only offers the government FHA loans, but also provides conventional loans backed through private mortgage insurance.

The program will provide a loan of up to 20% of the purchase price of a home or a maximum amount of up to $150,000. The money can be used to help finance a down payment, closing costs or a first-time mortgage.

Your tax statements from the last two years or more will show the lender your patterns of income and earnings. The lender is looking for a reason to justify the risk of issuing the mortgage.

Unfortunately, sellers often perceive the FHA loan approval process as risky because of the FHA's relatively lenient financial requirements and stricter appraisal and property standards.

For example, a homebuyer might ask, "Do I need to make at least $50,000 a year to get approved for an FHA loan?" The answer to this question is "no." There are no minimum income requirements for FHA loans. However there is often a maximum debt-to-income ratio (DTI) requirement that does affect your eligibility.

FHA minimum credit score

If you put just 3.5 percent down, the minimum credit score for an FHA loan is 580. You can qualify with a score as low as 500, but you'll need to make at least a 10 percent down payment.