Since 1934, the Federal Housing Administration (FHA) has provided Americans loans with low down payments, minimal closing costs and less stringent qualifications compared to traditional loans. FHA is placed under the umbrella of the U.S. Department of Housing and Urban Development (HUD) and insures the loan when it is granted by a creditor. Loans are approved and administered by many lenders across the USA based on guidelines established by FHA and HUD.
California has over 3,300 approved FHA lenders and mortgage brokers, as of 2010. The minimal requirements for an FHA loan are having a legal social security number, owning legal residency in the USA and being of lawful age to sign up a mortgage. Lenders will also need documentation and verification of assets, income, credit and credit history, based on FHA Outreach. Maximum FHA loan limits vary by county based on HUD formulations created by the National Housing Act. As of 2009, the maximum loan amount to get a single-family home in San Francisco County is $729,750.
National Banks and Mortgage Companies
Large national banks like Bank of America and JP Morgan Chase are FHA-approved, as of 2010, and might offer competitive rates because of their size and monetary backing. Local branches can lead borrowers to the appropriate loan officers to qualify for FHA financing. Many mortgage companies and smaller regional banks, such as Flagstar and Pacific National banks, are approved as FHA lenders, and might fund loans through to closing before selling them to a bigger conglomerate later.
Credit unions are nonprofit financial cooperatives owned by members, as stated by the University of California’s definition of a concerted. Members normally share a common bond, like the San Francisco Fire Credit Union, which provides membership to firefighters and their families and is FHA-approved, as of 2010. Other credit unions characterized under FHA guidelines in the San Francisco area comprise Stanford Federal Credit Union and Technology Credit Union.
Mortgage brokers find lenders for potential borrowers and are paid a commission or commission as a portion of their loan process. Benefits of mortgage brokers include having access to several FHA lenders and doing much of the legwork a borrower would have to do separately. The Consumer Information Center warns that mortgage brokers are not obligated to obtain the best bargain for a borrower, unless a contract for agency exists. Borrowers may consider contacting more than one mortgage broker in their area. FHA-approved mortgage brokers working in the Bay Area include Guarantee Mortgage Corporation and Martin Group Lending, as of 2010.
Because numerous lenders offer FHA loans, borrowers have the opportunity to shop for the very competitive rates and fees. Meet with creditors and ask a Good Faith Estimate (GFE) that discloses all necessary fees, such as origination and record recording, and provides you with an estimated payment based on your own down payment and escrow requirements. HUD advises consumers to request information regarding FHA mortgages from several lenders or brokers.