How to Qualify for an FHA Mortgage in California
- 1). Look up FHA loan limits in your part of California. Limits vary widely, ranging from $729,750 for one-family homes in Alameda County to $580,000 in Placer County and $311,250 in Del Norte County. Log on to the homepage of HUD's FHA page to determine your county's limit.
- 2). Call a housing counseling agency if you're unsure of whether your financial situation is strong enough to add a mortgage loan payment to your monthly debt obligations. Work with a housing counselor approved by the Department of Housing and Urban Development. Find a list of California state housing agencies approved by the department on its Web page.
- 3). Call a mortgage lender or bank to start the application process. Though the federal government insures FHA loans, it does not originate them. Remember that just because you are buying a home in California you are not obligated to work with a lender in the state.
- 4). Gather the financial papers that your lender will need to determine if you qualify for an FHA-insured mortgage. Include your last two W-2 forms, last two paychecks, most recent credit card bills, other loan statements and bank savings and checking account statements. Make copies of these financial papers.
- 5). Give your lender permission to run a credit check. For FHA-insured loans, lenders will need a credit score of at least 580. If your credit score is higher, at 720 or above, you'll qualify for the lowest mortgage interest rates.
- 6). Send your lender copies of the required financial documents. Your lender will verify your gross monthly income and monthly debt obligations. Your lender will want to see that your monthly obligations, including the cost of your estimated new mortgage payment, is less than 36 percent of your gross monthly income.
- 7). Take note of your lender's appraisal report determining the current market value of the home you are interested in purchasing. If you make an offer, your lender will need to determine that it is not lending money in excess of the home's value.
