FHA Is The Best Way for Orange County First Time Buyers to Purchase a Home

Orange County first time home buyers are finding out quickly that FHA is one the best ways to purchase a home. FHA allows for only a 3.5% down payment, and it can come from a gift, your 401K, or money already in the bank. Qualifying is not that difficult.

Why is an FHA loan better than a Conventional Loan for an Orange County First Time Buyer?

Conventional financing, using Fannie Mae and Freddie Mac guidelines, requires at least 10% down in real estate markets considered to be “declining”. Orange County has been lumped into that category based on the fall in values from a few years ago. Values have certainly leveled off at this point, but still, 10% down can be a hefty down payment. Plus, even with 10% down a borrower will need to qualify not only for the loan but also for PMI, or Private Mortgage Insurance. If you’re going to go through all of that hassle, you may as well just go with FHA and put 3.5% down. Plus, on a Conventional loan, at least half (5%) of the 10% down payment would need to come from your own funds. And if you were getting a loan from your 401K for the 5%, the 401K loan payment would be counted against you, which could hurt your chances at qualifying for the home you really want. FHA does not count a 401K loan payment in the overall qualifying “debt to income” ratios.

Orange County Buyers Can Also Use a VA Loan

For those that are eligible, VA offers 100% financing and with no monthly mortgage insurance. While not everyone has VA eligibility, now is a great time to take advantage of 100% financing for those that are VA eligible.

A few years ago there were literally thousands of different lenders offering thousands of crazy loan programs. It turns out most of those programs were a little too aggressive and allowed home buyers to get in over their heads. FHA is a Full Income Qualifying loan, meaning a Direct Endorsed FHA Underwriter will review the borrowers income and assets thoroughly. To find out what you are qualified for prior to beginning the home search, you will need to get the following items together.

Paystubs for the most recent 30 days
W2’s and Federal Tax returns for the most recent 2 years.
Bank statements, all pages, for the most recent 2 months. Include investment accounts and 401K.
Scanned copies of drivers license and social security card.

These items, along with a completed loan application, will get you started on getting PreApproved for an FHA loan.

It is important to not only find a qualified loan officer who is an Orange County FHA loan expert, but also someone who has the patience to answer all of your questions and who will respond quickly to any issues that arise during the loan process.

FHA also offers a great Reverse Mortgage program for Orange County senior homeowners. the program is called the HECM, and is a great option for seniors.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com