FHA mortgages are loans that are issued by banks, credit unions and other lenders but are guaranteed by the Federal Housing Administration. That guarantee protects the lender in case of losses if you default on the loan. Because of their more lenient qualification criteria and their lower interest rates, FHA loans appeal to people who may not have money for a large down payment or may have a difficult time qualifying for a conventional loan.
If you are a new home buyer or have a limited housing budget, an FHA loan may be a good option for you. FHA loans offer borrowers some important advantages.
Your down payment can be as low as 3.5%.
The seller can pay part of your closing costs.
Closing costs are limited in order to make them affordable.
Your credit scores can be less than perfect.
You can choose from both fixed or adjustable options.
You can use an FHA loan to either purchase or refinance a current home.
Your mortgage is assumable should you decide to sell.
At Alliance Lending, our San Jose FHA loans specialists can show you how an FHA mortgage may benefit you. Because FHA mortgages have lower qualification standards and more relaxed guidelines, many first time home buyers and others with more financial constraints can find qualifying for these government-insured mortgages easier than qualifying for conventional loans.
In order to qualify for an FHA loan in San Jose, an applicant must
Meet a minimum of 580 FICO credit standards, Minimum credit scores for conventional loans are typically at least 620 but can vary by lender.
Apply for a loan within the guidelines of that county. For Santa Clara county, the loan maximum is $726,525 for a single-family home and $930,300 for a two-family dwelling.
Be applying for lending on a primary home
Provide a minimum of 3.5% as a downpayment
Have a debt-to-income ratio of 50% or below
Be able to provide documents such as proof of current income, W-2 forms and bank statements
Show evidence of steady income and a recent history of responsible bill payment
Have no bankruptcies for two years prior
Have no foreclosures for three years prior
A conventional mortgage will require a credit score of at least 620 so an applicant with a lower credit score will still have an option to apply for an FHA loan in San Jose. Even with a higher credit score of 620, an FHA mortgage may still provide lower monthly payments than conventional financing in certain situations.
At Alliance Lending, we work with many different lenders that offer FHA financing for qualified applicants. Our mortgage professionals are experienced with FHA underwriting criteria and can guide you through the application process quickly and seamlessly. Find out if you qualify by contacting us at 408-226-4000 and speaking to one of our loan officers.
Alliance Group & Associates Inc. is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines.