What is an FHA Loan?
An FHA loan is a mortgage that's insured by the Federal Housing Administration (FHA). They are popular especially among first time home buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.
Borrowers can qualify for an FHA loan with a down payment as little as 3.5% for a credit score of 580 or higher. The borrower's credit score can be between 500 - 579 if a 10% down payment is made. It's important to remember though, that the lower the credit score, the higher the interest borrowers will receive.
The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable for people with less than stellar credit or a low down payment. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.
Benefits of FHA Loans
Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. For FHA loans, down payment of 3.5 percent is required for maximum financing. Borrowers with credit scores as low as 500 can qualify for an FHA loan.
Borrowers who cannot afford a 20 percent down payment, have a lower credit score, or can't get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.
Another advantage of an FHA loan it is an assumable mortgage which means if you want to sell your home, the buyer can "assume" the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.
Buying your first home?
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.
Want a fixer-upper?
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.
Financial help for seniors
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.
How about manufactured housing and mobile homes?
Yes, FHA has financing for mobile homes and factory-built housing. There are two loan products - one for those who own the land that the home is on and another for mobile homes that are - or will be - located in mobile home parks.
"Derric does beyond! When I started looking for my first home with a small budget and not sufficient credit score, he looked for all possible options. In addition, I was a picky buyer, (I still am today), I took about 2 years to get one. He was beyond helpful in my loooong home search! Even after the purchase is closed his support is continued and I got a great refinance few yrs later."
Virginia C. San Diego, Ca
"Purchased my first single family home with Derric's help in November 2015 with a VA 30 year fixed loan at a very low rate and great terms. The terms and rate were better than the USAA and Navy Federal loans I had been researching. It was refreshing to deal with someone honest and straightforward. Derric was always available and his turn around on paperwork is appreciated."
Jered S. San Diego, Ca
"As a real estate agent, it's important for me that my homebuyers and refi clients are taken care of. I've worked with other loan officers but nobody can match the kind of service Derric gives to my clients. He goes out of his way to make sure my clients understand the process and status so my clients can make better decision. On top of that, he is pretty honest and will tell you the truth of where your loan stands, no sugar coating."
Jane M. San Diego, Ca
"Derric helped with my home loan and did a great job. I had to do two separate loans and he coordinated them to perfection and the deal closed on time with no problems. I now own my very first home and am just thrilled. Dealing with big banks is a major hassle and Derric had it under control the whole time and dealt with every hassle that the bank threw at him. I would definitely use him again and highly recommend him. Awesome guy."
Stephen B. San Diego, Ca
C2 Financial - San Diego Home Loans
With over 65 years experience in the mortgage industry C2 Financial has some of San Diego's top mortgage consultants, and Derric is one of their best. In 2016, C2 closed more than 2.5 billion in home loans and is rated top 50 mortgage companies to work for by Mortgage Executive Magazine.