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FHA Loans in California

By Michael Stradford
Updated October 29, 2019
3 min read
San Francisco, California

California is known for the glamorous lifestyle of the stars who live there, but any true Californian knows there’s so much more to the Golden State. Unfortunately, things that make California an amazing place to live can sometimes lead to higher home prices, which can make financing difficult. It’s not time to run for the Hidden Hills though, because homebuyers in California can finance their home without a perfect credit score and huge down payment.

Continue reading to learn how the FHA loan program can save you money on your mortgage, and an FHA loan in California can make your home-buying decision a bit easier.

Why choose an FHA Loan in California?

With a fast growing population, it’s unsurprising the total FHA loan volume as of April 2019 was nearly $1.5 billion! California has got it all when it comes to its sunny beaches, rich wildlife, bustling cities. That being said, you can’t go wrong when looking for a home in California, and an FHA loan can help.

Benefits of using FHA Loans in CA

  • FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
  • FHA mortgage rates are typically lower than conventional mortgage rates.
  • FHA down payment and credit score requirements are typically lower than conventional loans
  • Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
  • FHA loans are assumable

FHA Loan Limits in California

As you may already know, in California you need to have an idea of how much you can borrow when you start home shopping. The FHA loan limit varies depending on where in California you decided to purchase your home, and is adjusted annually. For most of California, the loan limit is $484,350, but in San Francisco the limit is significantly higher at $726,525. See the link below for a full list of California FHA loan limits in 2019.

Are You Eligible for an FHA Loan in CA?

You may be eligible for an FHA loan, if you:

  • Have 2 years of steady employment, preferably with the same employer.
  • Have had steady income (or increasing income) in the past two years.
  • Have had less than two 30 day periods of late payments on your credit report.
  • Have declared bankruptcy no less than two years ago and have maintained good credit since.
  • Have not been a party in a foreclosure for at least three years and have maintained good credit since.
  • Anticipate your mortgage payment will be equal to or less than 30% of your gross income.

What Do You Need to Apply for an FHA Loan in CA?

Buyers must be able to provide the following information and documents as requested by lenders:

  • The addresses of all your residences over the past two years.
  • The names of your employers over the past two years.
  • W2's for the past two years and current paycheck stubs.
  • Your current gross monthly salary.
  • Your Social Security Number.
  • Names, addresses, and account numbers with balances on all checking and savings accounts.
  • Addresses and loan information of any other real estate you owned.
  • Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
  • Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.

Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.

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