FHA Loans in Los Angeles
FHA mortgages are insured by the Federal Housing Administration. The main purpose of an FHA loan is to allow borrowers a low down payment option to purchase a home. A popular choice for first time home buyers and those that have had some credit issues in the past. An FHA loan can be funded for a fixed payment term of 10, 15, 20, 25 or 30 years, although most often the choice of 30 years is used. You can also get a Los Angeles FHA loan with an adjustable rate.
Advantages of an FHA Loan
FHA loans offer the advantage of a minimum of 3.5% down payment, which can be received as a gift from a family member/company etc. A gift or financing can also be used for the closing costs of up to 6% of the loan. Individuals with a bankruptcy can apply if the bankruptcy is 2 years or older, and those with a foreclosure can apply after 3 years. If you have less than perfect credit there is still a chance to be approved, as well as no credit if you are a first time home buyer. You can also have a higher debt to income ratio than a conventional mortgage and still be approved.
Disadvantages of an FHA Loan
You may only purchase a home that you plan on being your primary residence. FHA loans do require an up-front mortgage insurance premium (also known as a UFMIP) and a monthly insurance premium (MIP). The type of property you purchase may also be restricted as well as there being a loan limit amount to purchase a property. In the county of Los Angeles, FHA loan limits are $729,750 for a single family residence, and vary slightly for other approved property types.
FHA Eligibility Requirements
FHA eligibility is determined by several factors. While the requirements on credit are generally less than a conventional mortgage, you will still need to meet income, credit, debt to income ratio and employment requirements by you lender. You will also need to provide a minimum down payment of 3.5% and be able to cover closing and insurance costs.
If you decide to use an FHA loan for your home purchase, you will later be able to refinance with several different options. The FHA allows for streamline refinancing which means after a certain period of time you can apply for a lower mortgage interest rate and monthly payment without the hassle of verifying your income, credit or getting the home appraised again. There are also other options for refinancing including a home renovation option known as the FHA 203(k) loan and a cash out fha refinance option which allows you to get cash from the equity in your home.
American Real Estate Loans offers a full range of home loans in Los Angeles and surrounding areas. Whether you are looking to refinance your current mortgage, purchase a home or get commercial real estate, we have an option available for you.