Many buyers in California today currently own the home they live in, but would like to take advantage of today’s bargain prices and record low FHA interest rates to buy a new primary residence. And they would like to be able to utilize the low 3.5% down payment required with FHA loans to buy their new primary residence. This post will explain what you need to know to do this.
So in order to get FHA loan on a new primary residence in California you will need the following:
- If you need to use the rent from the residence you are vacating as income to offset the housing payment to qualify for the new FHA loan, you will need to have 25% equity in the home you are vacating. This means the total loan balance will have to be 75% of less than the current value. The lender will determine this by doing an appraisal on your current home. If you do have 25% equity, then you can use 85% the projected rent for your current residence. The appraisal will also determine the average rents with a rent survey.
- If you do not have 25% equity in your current house, you will need to qualify with your current house payment (mortgage + property taxes + insurance) PLUS the new housing payment for the house you plan get FHA loan to buy. So will likely need to have a very healthy income and possibly little other debt to accomplish this.
One other thing to keep in mind when vacating your current home and keeping it and buying a new primary residence with an FHA loan, is if you are buying a house close by in the same neighborhood, the underwriter usually wants it to make sense. For example you are moving from a smaller house to a larger house. Or a house with no yard to a house with a yard. Also, if you are moving closer to work or a different school district (but not to a larger house) this is acceptable.
Some additional advantages of getting FHA loan in California to keep in mind:
- FHA loan credit score minimum is generally about 620, it gets much more difficult to qualify FHA loan below this score. Conventional loans require a 720 score for 10% down, so 620 is very forgiving.
- FHA home loan requirements for qualification are much more relaxed than 10% down conventional loans with 55% debt ratio and 620 credit scores vs. 41-45% debt ratios and 720 scores for conventional
- FHA max loan amount is $729,750 in the coastal areas of California such as San Francisco, San Jose, San Diego, Orange County, Los Angeles and Santa Barbara
- FHA loan down payment is 3.5% which is the lowest of any mainstream mortgage loan out there today
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA, VA or conventional Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
Qualify FHA Loan 2 Years After Chapter 7 Bankruptcy
Related posts:
- Renting Out Your Current House and Buying a New House With a FHA Loan
- Keep Your Current House and Apply for a FHA Loan to Buy a New Residence
- Get FHA Loan After Doing a Short Sale On Your Current Home
- Using FHA Home Loans to Buy 2-4 Unit Properties
- Update on The $8,000 Home Buyer Tax Credit – Great Chance to Get an FHA Loan to Buy a Home
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