First time home buyers in Orange County, CA are finding that the FHA loan program is a great way to finance the purchase of the first home. FHA is not only for first time buyers, as many move up buyers are finding out. But because of the low down payment requirements, first timers are finding FHA to be the best and most flexible way to buy a home. In cities such as Placentia, FHA loans are very popular.
Orange County FHA Loan Limits
In past years FHA was notorious for having very low loan limits. A few years ago, when the average Orange County home was selling for close to $600,000, the maximum FHA loan amount was only $362,790. However, now prices have dropped while the FHA limits have increased. Home buyers are finding single family homes on nice sized lots in for $300,000 to $400,000 in cities like Placentia, Orange, Tustin, and Santa Ana. In the meantime HUD increased the loan limit in Orange County (and Los Angeles county) to $729,750. Buyers are purchase ” a lot of home” for that size loan. And with only 3.5% down payment.
What are the benefits of an FHA loan for Orange County First Time Buyers?
- FHA loan programs have no prepayment penalty and tend to be steady 30 and 15 year fixed programs.
- FHA loans have competitive interest rates.
- FHA mortgage insurance is very competitive for PMI which a buyer would need on a Fannie Mae loan when putting less than 20% down payment. FHA mortgage insurance is also much easier to get.
- Low Down Payment equal to 3.5% of the purchase price. Also, the down payment can be a gift or even come from a 401K.
- Flexible credit guidelines. Technically FHA does not have a minimum FICO score requirement. However, most lenders do require a minimum 620 score. That is still very low compared to what would be required on a Fannie Mae loan. (Plus Fannie Mae would have a very high interest rate as a penalty for a score lower than 680, plus would require more than 10% down in most cases.)
What is the first step for an Orange County First Time Buyer
The first step is to get PreQualified for an FHA loan. Before looking at homes, and especially before making an offer on a home, a first time buyer needs to talk to a qualified FHA loan expert. The buyer will want to make sure they have enough money to complete the transaction. They will need to explore whether they will need to negotiate to have the seller pay the closing costs, thus leaving them with just the 3.5% down payment. They will also want to find out home much of a payment they will qualify for and what that payment translates into as far as home price. Many buyers are surprised to find that they qualify for more payment than they are actually comfortable making. They still want to eat out every now and then.
First Time Buyer Free Report and Customized Analysis
A qualified FHA loan expert can put together loan scenarios which will let the first time buyer know, in detail, all the expenses that go into the purchase of a home. Also, the loan expert, or loan officer, can prepare a Rent vs Own analysis which will show the tax benefits of owning a home, as well as the long term benefits of owning a home rather than paying rent.
Written by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan. 877-786-4243 x 7.
Contact us for your Orange County FHA Mortgage:
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
* Licensed by California Dept. of Real Estate. Lic. # 01190897
