FHA Home Loans in Carlsbad, CA
FHA loans provide a great opportunity to buy a home in Carlsbad, California. The FHA (Federal Housing Administration) was created to help the average American have a chance at owning their own home. One of the reasons that FHA loans are so popular is because of the low down payment option. FHA loans allow you to purchase a home with only a 3.5% down payment. There are also less strict requirements to get an FHA loan (compared to conventional loans), such as being able to qualify with a credit score as low as 500.
Carlsbad, CA – FHA Loan Eligibility Requirements
Below are some of the basic requirements to get an FHA loan:
- Credit Score – To qualify for the 3.5% down payment, you must have a 580 credit score or higher. If your credit score is between a 500-579, you still may qualify for an FHA loan, but will be required to put 10% down.
- Debt-to-Income – You can not have a debt-to-income ratio higher than 43%. However, if you have “compensating factors” you might be able to get approved with higher debt levels (a compensating factor could be more money in savings, longer job history, or great credit).
- Financial Statements – You should expect to be required to provide your 2 most recent bank statements, pay stubs, and tax returns.
- Property Requirements – The home you want to buy must not have any hazardous conditions or materials. If the home is in bad shape and needs repairs, it might qualify for a FHA 203k rehab loan. For a standard FHA loan, the home must be move in ready though, and the appraisal of the property must specify conditions which will inform the underwriter if it is ready to be moved into.
- Owner Occupied – Must occupy the home yourself and it must be your primary residence. FHA loans are not available to finance an investment property, second home, or vacation home.
- FHA Loan Limits – FHA loan limits are the maximum amount that you may borrow using an FHA loan in a particular county. You can look up the 2020 FHA loan limits for Carlsbad, CA (San Diego County) on this page.
- Mortgage Insurance – All FHA loans, regardless of the lender, require two types of mortgage insurance. This includes what is known as UPMIP (Upfront Mortgage Insurance Premium) and the regular MIP (Mortgage Insurance Premium). FHA MIP acts similarly to how PMI (Private Mortgage Insurance) on a conventional loan acts. If you would like to see what your estimated mortgage insurance costs will be (and also estimate your monthly mortgage payment), use this FHA loan calculator.
These are just some of the basic requirements to get an FHA loan. If you are approved for an FHA loan, your lender may have additional requirements.
Would you like to find out if you qualify for an FHA loan? We can help match you with a mortgage lender that offers FHA loans in Carlsbad, CA.
How to Get an FHA Loan in Carlsbad, CA
In order to get an FHA loan, you will need to use an FHA approved lender. Most mortgage lenders are FHA approved (including the majority of banks, non-bank lenders, credit unions, and mortgage brokers).
If you would like to get some help finding an FHA approved lender, please request to get matched with a lender. Upon receiving your request, we will help match you with a mortgage lender that offers FHA loans in Carlsbad, CA. The lender that we connect you with can help answer all of your questions about FHA loans, and also help you see if you qualify.
Frequently Asked Questions About FHA loans
Below are some frequently asked questions and answers about FHA loans:
Is down payment assistance available for FHA loans?
Most down payment assistance programs are eligible to use with an FHA loan. The types of down payment assistance programs that are available depend on the location. A mortgage lender can help you determine if you are eligible for any down payment assistance programs. To have a mortgage lender help you check your eligibility for down payment assistance, request to be contacted by a lender.
Are there any mortgage programs that offer lower down payment options?
There are two different mortgage programs that offer 100% financing (which means that no down payment is required). This includes VA loans and USDA loans. VA loans are exclusively available for veterans, and USDA loans are available to finance rural properties (they are not available to finance homes located in cities or large towns).
What are “compensating factors” for an FHA loan
The FHA allows for a certain degree of leniency when it comes to what can be approved. When an applicant for an FHA loan falls a little bit short on certain requirements, but is strong in other areas, they still may get approved. Specific compensating factors are higher credit, long employment history, more in savings, or assets. Any one or more of these can help you get approved if you do not match up on other certain requirements.
How do I get pre-approved for an FHA loan?
If you qualify for an FHA loan, it is easy to get pre-approved. An FHA mortgage lender can help you quickly see if you are eligible for an FHA loan. To have an FHA lender contact you, please request to get matched with a lender.
Are cosigners allowed for FHA loans?
Yes, cosigners and co-borrowers are allowed on FHA loans. You also can have a joint applicant who is not your spouse or relative.
What are the pros and cons of FHA loans?
The main “pros” of FHA loans are: the low down payment option, they are easier to qualify for than conventional loans, the fact they are assumable and the refinancing options. The “cons” would be the costly mortgage insurance premiums, that they are not available for investment properties, and some may find loan limits in certain areas to be too low (FHA loan limits are often lower than conforming loan limits).
What are the options to refinance an FHA loan?
FHA loans offer two different options for refinancing. This includes the FHA streamline refinance, which allows you to refinance your mortgage efficiently in order to reduce your interest rate and monthly payment. This program does not require a new appraisal, credit check, or income documentation. The other option is the FHA cash out refinance, which allows you to take equity out of your property.
Still have more questions about FHA loans?
An FHA loan representative can help answer all of your questions about FHA loans. To have an FHA lender contact you, request a free consultation. We will match you with a mortgage lender that offers FHA loans in Carlsbad, CA.